10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2017
	OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                     to
	Commission file number: 000-55084

Prudential Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	46-2935427
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1834 West Oregon Avenue Philadelphia, Pennsylvania	19145
(Address of Principal Executive Offices)	Zip Code

(215) 755-1500

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x  No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x  Yes  ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨ (Do not check if smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨  Yes  x  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practical date: as of April 30, 2017, 10,819,006 shares were issued and 9,007,996 were outstanding.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

PRUDENTIAL BANCORP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION:
Item 1.	Consolidated Financial Statements
	Unaudited Consolidated Statements of Financial Condition March 31, 2017 and September 30, 2016	2
	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2017 and 2016	3
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for for the Three and Six Months Ended March 31, 2017 and 2016	4
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended March 31, 2017 and 2016	5
	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2017 and 2016	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60
Item 4.	Controls and Procedures	60
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	63
SIGNATURES		64

1 

PRUDENTIAL BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	March 31,			September 30,
	2017			2016
	(Dollars in Thousands, except share data)
ASSETS
Cash and amounts due from depository institutions	$	2,587		$	1,965
Interest-bearing deposits		10,471			10,475
Total cash and cash equivalents		13,058			12,440
Certificates of deposit		1,853			1,853
Investment and mortgage-backed securities available for sale (amortized cost—March 31, 2017, $192,636; September 30, 2016, $137,222)		190,108			138,694
Investment and mortgage-backed securities held to maturity (fair value—March 31, 2017, $56,540; September 30, 2016, $40,700)		58,197			39,971
Loans receivable—net of allowance for loan losses (March 31, 2017, $3,896; September 30, 2016, $3,269)		521,885			344,948
Accrued interest receivable		2,626			1,928
Real estate owned		192			581
Federal Home Loan Bank stock—at cost		5,699			2,463
Office properties and equipment—net		8,219			1,344
Bank owned life insurance		27,709			13,055
Prepaid expenses and other assets		2,530			1,634
Goodwill		7,163			-
Intangible assets		785			-
Deferred tax assets-net		4,204			569
TOTAL ASSETS	$	844,228		$	559,480
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing	$	9,272		$	3,804
Interest-bearing		585,838			385,397
Total deposits		595,110			389,201
Advances from Federal Home Loan Bank (short-term)		27,000			20,000
Advances from Federal Home Loan Bank (long-term)		79,057			30,638
Accrued interest payable		790			1,403
Advances from borrowers for taxes and insurance		2,789			1,748
Accounts payable and accrued expenses		8,716			2,488
Total liabilities		713,462			445,478
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued		-			-
Common stock, $.01 par value, 40,000,000 shares authorized; 10,819,006 and 9,544,809 issued and 9,007,996 and 8,045,544 outstanding at March 31, 2017 and September 30, 2016, respectively		108			95
Additional paid-in capital		117,467			95,713
Unearned Employee Stock Ownership Plan (ESOP) shares		-			(4,550	)
Treasury stock, at cost: 1,811,010 shares at March 31, 2017 and and 1,499,265 shares at September 30, 2016		(26,629	)		(21,098	)
Retained earnings		41,140			43,044
Accumulated other comprehensive (loss) income		(1,320	)		798
Total stockholders' equity		130,766			114,002
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	844,228		$	559,480

See notes to unaudited consolidated financial statements.

2 

PRUDENTIAL bancorp, inc. and subsidiarIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended March 31,					Six Months Ended March 31,
	2017			2016		2017			2016
	(Dollars in Thousands, Except Per Share Data)
INTEREST INCOME:
Interest on loans	$	5,090		$	3,166	$	8,415		$	6,226
Interest on mortgage-backed securities		806			683		1,377			1,195
Interest and dividends on investments		731			509		1,337			988
Interest on interest-bearing assets		44			8		47			13
Total interest income		6,671			4,366		11,176			8,422
INTEREST EXPENSE:
Interest on deposits		996			743		1,687			1,495
Interest on advances from Federal Home Loan Bank		376			106		542			154
Total interest expense		1,372			849		2,229			1,649
NET INTEREST INCOME		5,299			3,517		8,947			6,773
PROVISION FOR LOAN LOSSES		2,365			75		2,550			75
NET INTEREST  INCOME AFTER PROVISION FOR LOAN LOSSES		2,934			3,442		6,397			6,698
NON-INTEREST INCOME:
Fees and other service charges		169			110		293			229
Gain on sale of loans, net		5			1		44			2
Gain on the sale of OREO		-			-		-			58
Income from bank owned life insurance		171			84		277			168
Other		173			14		262			26
Total non-interest income		518			209		876			483
NON-INTEREST EXPENSE:
Salaries and employee benefits		2,140			1,670		3,709			3,387
Data processing		194			112		306			228
Professional services		469			241		788			520
Office occupancy		416			259		668			507
Director compensation		93			102		161			228
Deposit insurance premium		71			90		41			172
Advertising		29			21		66			38
Merger related costs		2,663			-		2,663			-
Intangible asset amortization		37			-		37			-
Other		651			301		1,044			612
Total non-interest expense		6,763			2,796		9,483			5,692
(LOSS) INCOME BEFORE INCOME TAXES		(3,311	)		855		(2,210	)		1,489
INCOME TAXES:
Current (benefit) expense		(642	)		111		(172	)		397
Deferred (benefit) expense		(529	)		196		(629	)		131
Total income tax (benefit) expense		(1,171	)		307		(801	)		528
NET (LOSS) INCOME	$	(2,140	)	$	548	$	(1,409	)	$	961
BASIC (LOSS) EARNINGS PER SHARE	$	(0.27	)	$	0.08	$	(0.18	)	$	0.13
DILUTED (LOSS) EARNINGS PER SHARE	$	(0.27	)	$	0.07	$	(0.18	)	$	0.12
DIVIDENDS PER SHARE	$	0.03		$	0.03	$	0.06		$	0.06

See notes to unaudited consolidated financial statements.

3 

PRUDENTIAL bancorp, inc. and subsidiarIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

	Three months ended March 31,						Six months ended March 31,
	2017			2016			2017			2016
	(Dollars in Thousands)
Net (loss) income	$	(2,140	)	$	548		$	(1,409	)	$	961
Unrealized holding (losses) gains on available-for-sale securities		(548	)		2,344			(4,000	)		1,160
Tax effect		186			(797	)		1,360			(395	)
Unrealized holding gain on interest rate swaps		59			-			784			-
Tax effect		(20	)		-			(262	)		-
Total other comprehensive income (loss)		(323	)		1,547			(2,118	)		765
Comprehensive (loss) income	$	(2,463	)	$	2,095		$	(3,527	)	$	1,726

See notes to unaudited consolidated financial statements.

4 

PRUDENTIAL bancorp, inc. and subsidiarIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

															Accumulated
			Additional			Unearned									Other			Total
	Common		Paid-In			ESOP			Treasury			Retained			Comprehensive			Stockholders'
	Stock		Capital			Shares			Stock			Earnings			Income (Loss)			Equity
	(Dollars in Thousands, Except Per Share Data)
BALANCE, October 1, 2016	$	95	$	95,713		$	(4,550	)	$	(21,098	)	$	43,044		$	798		$	114,002
Net loss													(1,409	)					(1,409	)
Other comprehensive loss																(2,118	)		(2,118	)
Dividends paid ($0.06 per share)													(495	)					(495	)
Issuance of common stock (1,274,197 shares)		13		21,814															21,827
Purchase of treasury stock (43,435 shares)										(995	)								(995	)
Terminate ESOP Plan (303,115 shares)							4,456			(5,189	)								(733	)
Treasury stock used for Recognition and Retention Plan (34,805 shares)				(653	)					653									-
Tax benefit from stock compensation plans				127															127
Stock option expense				236															236
Recognition and Retention Plan expense				185															185
ESOP shares committed to be released (8,879 shares)				45			94												139
BALANCE, March 31, 2017	$	108	$	117,467		$	-		$	(26,629	)	$	41,140		$	(1,320	)	$	130,766
															Accumulated
			Additional			Unearned									Other			Total
	Common		Paid-In			ESOP			Treasury			Retained			Comprehensive			Stockholders'
	Stock		Capital			Shares			Stock			Earnings			Income			Equity
	(Dollars in Thousands, Except Per Share Data)
BALANCE, Octoober 1, 2015	$	95	$	95,286		$	(4,926	)	$	(14,691	)	$	41,219		$	18		$	117,001
Net income													961						961
Other comprehensive income																765			765
Dividends paid ($0.06 per share)													(452	)					(452	)
Tax benefit from stock compensation plans				111															111
Purchase of treasury stock (430,636 shares)										(6,705	)								(6,705	)
Treasury stock used for Recognition and Retention Plan (41,800 shares issued)				(640	)					640
Stock option expense				219															219
Recognition and Retention Plan expense				160															160
ESOP shares committed to be released (17,758 shares)				77			188												265
BALANCE, March 31, 2016	$	95	$	95,213		$	(4,738	)	$	(20,756	)	$	41,728		$	783		$	112,325

See Notes To Unaudited Consolidated Financial Statements.

5 

PRUDENTIAL BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended  March 31,
	2017			2016
	(Dollars in Thousands)
OPERATING ACTIVITIES:
Net (loss) income	$	(1,409	)	$	961
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		241			158
Net amortization of premiums/discounts		510			66
Provision for loan losses		2,550			75
Net amortization of deferred loan fees and costs		165			106
Share-based compensation expense for stock options and awards		139			379
Income from bank owned life insurance		(277	)		(168	)
Gain from sale of loans held for sale		(44	)		(2	)
Gain on sale of other real estate owned		(60	)		(58	)
Originations of loans held for sale		(2,434	)		(450	)
Proceeds from sale of loans held for sale		2,478			452
Compensation expense of ESOP		421			265
Deferred income tax (expense) benefit		(629	)		131
Changes in assets and liabilities which used cash:
Accrued interest receivable		(698	)		(109	)
Prepaid expenses and other assets		4,281			(497	)
Accrued interest payable		(613	)		(748	)
Accounts payable and accrued expenses		(2,686	)		(383	)
Net cash provided by operating activities		1,935			178
INVESTING ACTIVITIES:
Purchase of investment and mortgage-backed securities available for sale		(55,673	)		(46,828	)
Purchase of corporate bonds available for sale		(11,714	)		(19,421	)
Purchase of municipal bonds held to maturity		(18,847	)		-
Loans originated		(104,878	)		(29,146	)
Principal collected on loans		85,384			19,416
Principal payments received on investment and mortgage-backed securities:
Held-to-maturity		578			21,913
Available-for-sale		11,504			1,546
Proceeds from the sale of Polonia Bancorp’s investment portfolio acquired		42,164			-
Redemption of FHLB Stock		163			-
Purchase of FHLB stock		-			(1,482	)
Proceeds from sale of real estate owned		449			927
Acquisition, net of cash		28,956			-
Purchase of BOLI		(10,000	)		-
Purchases of equipment		(214	)		(161	)
Net cash used in investing activities		32,128			(53,236	)
FINANCING ACTIVITIES:
Net decrease increase in demand deposits, NOW accounts, and savings accounts		(4,009	)		(2,788	)
Net increase in certificates of deposit		37,675			21,784
Proceeds from FHLB advances		-			38,000
Repayment of FHLB advances		(1,813	)		(941	)
Increase in advances from borrowers for taxes and insurance		1,041			107
Cash dividends paid		(495	)		(452	)
Release unallocated shares from ESOP Plan		4,550			-
Repayment of remaining principal balance of ESOP Loan		(733	)		-
Purchase of treasury stock		(5,531	)		(6,705	)
Tax benefit related to stock compensation plans		127			111
Net cash provided by financing activities		30,812			49,116
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		618			(3,942	)
CASH AND CASH EQUIVALENTS—Beginning of period		12,440			11,272
CASH AND CASH EQUIVALENTS—End of period	$	13,058		$	7,330
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid on deposits and advances from Federal Home Loan Bank		2,842			2,397
Income taxes paid		980			350
Acquisition of noncash assets and liabilities
Assets acquired:
Investment securities		42,164
Loans		160,157
Premises		6,902
Core deposit intangible		822
Other Assets		14,039
Total Assets		224,084
Liabilities assumed:
Deposits		172,243
Advances		57,232
Other liabilities		8,914
Total liabilities assumed		238,389
Net non-cash assets (liabilities) acquired		(14,305	)
Cash acquired		47,901

See accompanying notes to the unaudited consolidated financial statements 

6 

PRUDENTIAL BANCORP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Prudential Bancorp, Inc. (the “Company”) is a Pennsylvania corporation and the parent holding company for Prudential Bank (the “Bank”). The Company is a registered bank holding company.

The Bank is a community-oriented Pennsylvania-chartered savings bank headquartered in South Philadelphia. The banking office network currently consists of the headquarters and main office, administrative office, and 10 full-service branch offices. Nine of the branch offices are located in Philadelphia (Philadelphia County), one is in Drexel Hill, Delaware County, and one is in Huntingdon Valley, Montgomery County (both Pennsylvania counties). The Bank maintains ATMs at all 11 of the banking offices. The Bank also provides on-line and mobile banking services.

The Bank is subject to regulation by the Pennsylvania Department of Banking and Securities (the “Department”), as its chartering authority and primary regulator, and by the Federal Deposit Insurance Corporation (the “FDIC”), which insures the Bank’s deposits up to applicable limits. As a bank holding company, the Company is subject to the regulation of the Board of Governors of the Federal Reserve System.

On January 1, 2017, the Company completed its acquisition of Polonia Bancorp, Inc. (“Polonia Bancorp”) and Polonia Bank, Polonia’s wholly owned subsidiary. Polonia Bancorp and Polonia Bank were merged with and into the Company and the Bank, respectively.

Basis of presentation – The accompanying unaudited consolidated financial statements were prepared pursuant to the rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) for interim information and therefore do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the financial statements have been included. The results for the three and six months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2017, or any other period. These financial statements should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.

Use of Estimates in the Preparation of Financial Statements—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions in the Company’s consolidated financial statements are recorded in the allowance for loan losses, goodwill and intangible assets, deferred income taxes, other-than-temporary impairment, and the fair value measurement for financial instruments. Actual results could differ from those estimates.

Share-Based Compensation – The Company accounts for stock-based compensation issued to employees, and where appropriate, non-employees, at fair value. Under fair value provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award at such date and is recognized as expense over the appropriate vesting period using the straight-line method. The amount of stock-based compensation recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. Determining the fair value of stock-based awards at the date of grant requires judgment, including estimating the expected term of the stock options and the expected volatility of the Company’s stock. In addition, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates or different key assumptions were used, it could have a material effect on the Company’s consolidated financial statements.

7 

Dividends with respect to non-vested share awards granted pursuant to the Company’s 2008 Recognition and Retention Plan (“2008 Plan”) and held in the Trust (the “Trust”) are held for the benefit of the recipients and are paid out proportionately by the Trust to the recipients of stock awards granted pursuant to the Plan as soon as practicable after the stock awards are earned. A recipient of a share award granted under the 2014 Stock Incentive Plan will not receive any dividends declared on the common stock subject to the award prior to the date the shares are earned.

Treasury Stock – Stock held in treasury by the Company is accounted for using the cost method, which treats stock held in treasury as a reduction to total stockholders’ equity. During the six month period ended March 31, 2017, the Company repurchased 303,115 shares of common stock of unallocated shares held in a suspense account by the Bank’s ESOP as collateral with value of $5.2 million in order to payoff the associated loans that were terminated as of December 31, 2016 in connection with the termination of the Bank’s ESOP. In addition, 42,791 shares of common stock were purchased in conjunction with the termination of the Polonia Bank ESOP as a result of the acquisition. The remaining shares purchased were related to the Company buying and selling shares for the benefit of the employee stock plans.

FHLB Stock – FHLB stock is classified as a restricted equity security because ownership is restricted and there is not an established market for its resale.  FHLB stock is carried at cost and is evaluated for impairment when certain conditions warrant further consideration. Management concluded that the FHLB stock was not impaired at March 31, 2017.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The ASU’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this ASU specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This ASU is effective, as a result of ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company expects to adopt the revenue recognition guidance on October 1, 2018 using the modified retrospective approach.  A significant amount of the Company’s revenues is derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance.  With respect to noninterest income, the Company is in its preliminary stages of identifying and evaluating the revenue streams and underlying revenue contracts within the scope of the guidance.  The Company is expecting to begin developing processes and procedures during fiscal 2018 to ensure it is fully compliant with these amendments. To date, the Company has not yet identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance; however, the Company’s implementation efforts are ongoing and such assessments may change prior to the October 1, 2018 implementation date.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). The amendments in this ASU require that an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The Company does not expect the adoption of this amendment will have a significant impact to its Consolidated Statements of Income.

8 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. Among other things, this ASU (a) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (g) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (h) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities including not-for-profit entities and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt the amendments in this ASU earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.  A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical expedients it may elect at adoption, but does not anticipate the amendments will have a significant impact on the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the impact to the Company’s balance sheet is estimated to result in less than a 1 percent increase in assets and liabilities. The Company also anticipates additional disclosures to be provided at adoption.

9 

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815). The amendments in this ASU apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a heading instrument under Topic 815. The standards in this ASU clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. For public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. An entity has an option to apply the amendments in this ASU on either a prospective basis or a modified retrospective basis. Early adoption is permitted, including adoption in an interim period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815). The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. The amendments in this ASU clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt host. An entity performing the assessment under the amendments in this ASU is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. For public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For entities other than public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606). The amendments in this ASU affect entities with transactions included within the scope of Topic 606, which includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. The amendments in this ASU do not change the core principle of the guidance in Topic 606; they simply clarify the implementation guidance on principal versus agent considerations. The amendments in this ASU are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The amendments in this ASU affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements of ASU 2014-09, ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606), which among other things clarifies the objective of the collectability criterion in Topic 606, as well as certain narrow aspects of Topic 606. The amendments in this ASU affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. This ASU is not expected to have a significant impact on the Company’s financial statements

10 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial asset not excluded from the scope that have the contractual right to receive cash. The underlying premise of the ASU is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. This ASU additionally addresses purchased assets and introduces the purchased financial asset with a more-than-insignificant amount of credit deterioration since origination (“PCD”). The accounting for these PCD assets is similar to the existing accounting guidance of FASB Accounting Standards Codification (“ASC”) 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, for purchased credit impaired (“PCI”) assets, except the subsequent improvements in estimated cash flows will be immediately recognized into income, similar to the immediate recognition of subsequent deteriorations in cash flows. Current guidance only allows for the prospective recognition of these cash flow improvements. Because the terminology has been changed to a “more-than-insignificant” amount of credit deterioration, the presumption is that more assets might qualify for this accounting under the Update than those under current guidance. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to the amount of retained earnings as of the beginning of the first reporting period in which the guidance is adopted. A prospective transition approach is required for debt securities. An entity that has previously applied the guidance of ASC 310-30 will prospectively apply the guidance in this Update for PCD assets. A prospective transition approach should be used for PCD assets where upon adoption, the amortized cost basis should be adjusted to reflect the addition of the allowance for credit losses. Upon adoption, the Company expects a change in the processes and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The new guidance may result in an increase in the allowance for loan losses which will also reflect the new requirement to include the non-accretable principal differences on PCI loans; however, the Company is still in the process of determining the magnitude of the increase and its impact on the Company’s financial position or results of operations. In addition, the current accounting policy and procedures for other-than-temporary impairment on investment securities available for sale will be replaced with an allowance approach. The Company is expecting to begin developing and implementing processes and procedures to ensure it is fully compliant with the amendments at the adoption date.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing diversity in practice. Among these include recognizing cash payments for debt prepayment or debt extinguishment as cash outflows for financing activities; cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage; and cash proceeds received from the settlement of bank-owned life insurance policies should be classified as cash inflows from investing activities while the cash payments for premiums on bank-owned policies may be classified as cash outflows for investing activities, operating activities, or a combination of investing and operating activities. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s statement of cash flows.

11 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), which requires recognition of current and deferred income taxes resulting from an intra-entity transfer of any asset (excluding inventory) when the transfer occurs. Consequently, the amendments in this ASU eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those annual reporting periods. For all other entities, the amendments are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual periods beginning after December 15, 2019. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, earlier adoption should be in the first interim period if an entity issues interim financial statements. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to the amount of retained earnings as of the beginning of the period of adoption. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . This ASU, among others things, clarifies that guarantee fees (other than product or service warranties) within the scope of Topic 460, Guarantees, are not within the scope of Topic 606. The effective date and transition requirements for ASU 2016-20 are the same as the effective date and transition requirements for the new revenue recognition guidance. For public entities with a calendar year-end, the new guidance is effective in the quarter and year beginning January 1, 2018. For all other entities with a calendar year-end, the new guidance is effective in the year ending December 31, 2019, and interim periods in 2020. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, which provides a more robust framework to use in determining when a set of assets and activities (collectively referred to as a “set”) is a business. The screening process requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. Public business entities should apply the amendments in this ASU to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this ASU should be applied prospectively on or after the effective date. This ASU is not expected to have a significant impact on the Company’s financial statements.

In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323), Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. This Update adds an SEC paragraph to the Codification following an SEC Staff Announcement about applying Staff Accounting Bulletin (SAB) Topic 11.M. Specifically, this announcement applies to ASU 2014-09, Revenue from Contracts with Customers (Topic 606); ASU 2016-02, Leases (Topic 842); and ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. A registrant should evaluate Updates that have not yet been adopted to determine the appropriate financial statement disclosures about the potential material effects of those Updates on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact that adoption of the Updates referenced in this announcement are expected to have on the financial statements, then in addition to making a statement to that effect, that registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. In this regard, the SEC staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies that the registrant expects to apply, if determined, and a comparison to the registrant’s current accounting policies. Also, a registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The amendments in this Update are effective immediately.

12 

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is a U.S. Securities and Exchange Commission (“SEC”) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021.

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). The amendments in this Update clarify what constitutes a financial asset within the scope of Subtopic 610-20. The amendments also clarify that entities should identify each distinct nonfinancial asset or in substance nonfinancial asset that is promised to a counterparty and to derecognize each asset when the counterparty obtains control. There is also additional guidance provided for partial sales of a nonfinancial asset and when derecognition, and the related gain or loss, should be recognized. The amendments in this Update are effective at the same time as the amendments in Update 2014-09. Therefore, for public entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. For all other entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position on results of operation.

In February 2017, the FASB issued ASU 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965). This Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust, which is a trust for which a regulated financial institution serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. For each master trust in which a plan holds an interest, the amendments in this Update require a plan's interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. The amendments in this Update remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments, which supplements the existing requirement to disclose the master trusts balances in each general type of investments. There are also increased disclosure requirements for investments in master trusts. The amendments in this Update are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715). The amendments in this Update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

13 

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20). The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

2. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, net of any treasury shares, during the period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, net of any treasury shares, after consideration of the potential dilutive effect of common stock equivalents, consisting of restricted stock and stock options based upon the treasury stock method using an average market price for the period.

The calculated basic and diluted earnings per share are as follows:

	Three Months Ended March 31,
	2017						2016
	Basic			Diluted			Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net (loss) income	$	(2,140	)	$	(2,140	)	$	548	$	548
Weighted average shares outstanding		8,639,908			8,639,908			7,380,880		7,380,880
Effect of common stock equivalents		-			-			-		270,973
Adjusted weighted average shares used in earnings per share computation		8,639,908			8,639,908			7,380,880		7,651,853
Earnings (loss) per share - basic and diluted	$	(0.27	)	$	(0.27	)	$	0.07	$	0.07
	Six Months Ended March 31,
	2017						2016
	Basic			Diluted			Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net (loss) income	$	(1,409	)	$	(1,409	)	$	961	$	961
Weighted average shares outstanding		7,979,541			7,979,541			7,498,933		7,498,933
Effect of common stock equivalents		-			-			-		246,791
Adjusted weighted average shares used in earnings per share computation		7,979,541			7,979,541			7,498,933		7,745,724
Earnings (loss) per share - basic and diluted	$	(0.18	)	$	(0.18	)	$	0.13	$	0.12

14 

For the three and six month period ended March 31, 2017, respectively, 303,610 and 341,277, exercisable stock options outstanding were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive since the Company incurred a net loss in both periods. The stock options outstanding as of March 31, 2016 had exercise prices below the then current per share market price for the Company’s common stock and were considered dilutive for the earnings per share calculation.

3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in accumulated other comprehensive (loss) income by component, net of tax:

	Three Months Ended March 31,
	2017			2016
	(Dollars in Thousands)
	Unrealized gains (losses)
	on available for sale			Unrealized gains (losses)
	securities and interest			on available for sale
	rate swaps (a)			securities (a)
Beginning Balance	$	(997	)	$	(764	)
Unrealized (loss) gains on available for sale securities		(362	)		1,547
Unrealized gains on interest rate swaps.		39			-
Total other comprehensive (loss) income		(323	)		1,547
Ending Balance	$	(1,320	)	$	783

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

The following table presents the changes in accumulated other comprehensive (loss) income by component, net of tax:

	Six Months Ended March 31,
	2017			2016
	(Dollars in Thousands)
	Unrealized gains (losses)
	on available for sale			Unrealized gains (losses)
	securities and interest			on available for sale
	rate swaps (a)			securities (a)
Beginning Balance	$	798		$	18
Unrealized (loss) gains on available for sale securities		(2,641	)		765
Unrealized gains on interest rate swaps.		523			-
Total other comprehensive income (loss)		(2,118	)		765
Ending Balance	$	(1,320	)	$	783

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

There was no reclassification adjustment to accumulated comprehensive income for the periods presented.

15 

4. INVESTMENT AND MORTGAGE-BACKED SECURITIES

The amortized cost and fair value of investment and mortgage-backed securities, with gross unrealized gains and losses, are as follows:

	March 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	20,988	$	-	$	(493	)	$	20,495
Mortgage-backed securities - U.S. government agencies		134,529		161		(1,898	)		132,792
Corporate bonds		37,093		82		(420	)		36,755
Total debt securities available for sale		192,610		243		(2,811	)		190,042
FHLMC preferred stock		26		40		-			66
Total securities available for sale	$	192,636	$	283	$	(2,811	)	$	190,108
Securities Held to Maturity:
U.S. government and agency obligations	$	29,500	$	122	$	(1,856	)	$	27,766
Mortgage-backed securities - U.S. government agencies		5,906		325		(37	)		6,194
Municipal bonds		22,791		150		(361	)		22,580
Total securities held to maturity	$	58,197	$	597	$	(2,254	)	$	56,540

16 

	September 30, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	20,988	$	36	$	-		$	21,024
Mortgage-backed securities - U.S. government agencies		90,817		860		(102	)		91,575
Corporate bonds		25,411		661		(19	)		26,053
Total debt securities available for sale		137,216		1,557		(121	)		138,652
FHLMC preferred stock		6		36		-			42
Total securities available for sale	$	137,222	$	1,593	$	(121	)	$	138,694
Securities Held to Maturity:
U.S. government and agency obligations	$	33,499	$	399	$	(129	)	$	33,769
Mortgage-backed securities - U.S. government agencies		6,472		459		-			6,931
Total securities held to maturity	$	39,971	$	858	$	(129	)	$	40,700

17 

The following table shows the gross unrealized losses and related fair values of the Company’s investment securities, aggregated by investment category and length of time that individual securities had been in a continuous loss position at March 31, 2017:

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(493	)	$	20,528	$	-		$	-	$	(493	)	$	20,528
Mortgage-backed securities - agency		(1,730	)		86,840		(168	)		7,251		(1,898	)		94,091
Corporate bonds		(420	)		22,498		-			-		(420	)		22,498
Total securities available for sale	$	(2,643	)	$	129,866	$	(168	)	$	7,251	$	(2,811	)	$	137,117
Securities Held to Maturity:
U.S. government and agency obligations	$	(1,856	)	$	32,499	$	-		$	-	$	(1,856	)	$	32,499
Mortgage-backed securities - agency		(37	)		1,267		-			-		(37	)		1,267
Municipal bonds		(361	)		17,044		-			-		(361	)		17,044
Total securities held to maturity	$	(2,254	)	$	50,810	$	-		$	-	$	(2,254	)	$	50,810
Total	$	(4,897	)	$	180,676	$	(168	)	$	7,251	$	(5,065	)	$	187,927

18 

The following table shows the gross unrealized losses and related fair values of the Company’s investment securities, aggregated by investment category and length of time that individual securities had been in a continuous loss position at September 30, 2016:

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
Mortgage-backed securities - agency	$	(50	)	$	16,498	$	(52	)	$	6,718	$	(102	)	$	23,216
Corporate bonds		(19	)		3,955		-			-		(19	)		3,955
Total securities available for sale	$	(69	)	$	20,453	$	(52	)	$	6,718	$	(121	)	$	27,171
Securities Held to Maturity:
U.S. government and agency obligations	$	(129	)	$	20,371	$	-		$	-	$	(129	)	$	20,371
Total securities held to maturity	$	(129	)	$	20,371	$	-		$	-	$	(129	)	$	20,371
Total	$	(198	)	$	40,824	$	(52	)	$	6,718	$	(250	)	$	47,542

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least once each quarter, and more frequently when economic or market concerns warrant such evaluation. The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities.  Management also evaluates other facts and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, the length of time and extent to which the fair value of the security has been less than cost, and the near-term prospects of the issuer.

The Company assesses whether a credit loss exists with respect to a security by considering whether (1) the Company has the intent to sell the security, (2) it is more likely than not that it will be required to sell the security before recovery has occurred, or (3) it does not expect to recover the entire amortized cost basis of the security. The Company bifurcates the OTTI impact on impaired securities where impairment in value was deemed to be other than temporary between the component representing credit loss and the component representing loss related to other factors. The portion of the fair value decline attributable to credit loss must be recognized through a charge to earnings. The credit component is determined by comparing the present value of the cash flows expected to be collected, discounted at the rate in effect before recognizing any OTTI, with the amortized cost basis of the debt security.  The Company uses the cash flows expected to be realized from the security, which includes assumptions about interest rates, timing and severity of defaults, estimates of potential recoveries, the cash flow distribution from the security and other factors, then applies a discount rate equal to the effective yield of the security.  The difference between the present value of the expected cash flows and the amortized book value is considered a credit loss.  The fair value of the security is determined using the same expected cash flows; the discount rate is a rate the Company determines from open market and other sources as appropriate for the particular security.  The difference between the fair value and the security’s remaining amortized cost is recognized in other comprehensive income (loss).

For both the three and six months ended March 31, 2017 and 2016, the Company did not record any credit losses on investment securities through earnings.

19 

U.S. Government and Agency Obligations - At March 31, 2017, there were 14 securities in a gross unrealized loss position for less than 12 months. These securities represent asset-backed issues that are issued or guaranteed by a U.S. Government sponsored agency or carry the full faith and credit of the United States through a government agency and are currently rated AAA by at least one bond credit rating agency. As a result, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2017.

Mortgage-Backed Securities – At March 31, 2017, there were 39 mortgage-backed securities in a gross unrealized loss position for less than 12 months, while there were six securities in a gross unrealized loss position for more than 12 months at such date. These securities represent asset-backed issues that are issued or guaranteed by a U.S. Government sponsored agency or carry the full faith and credit of the United States through a government agency and are currently rated AAA by at least one bond credit rating agency. As a result, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2017.

Corporate Bonds – At March 31, 2017, there were 16 securities in a gross unrealized loss for less than 12 months. These securities are backed by publicly traded companies with an investment grade rating by one or more of the three following rating agencies (S&P, Moody’s or Fitch). As a result, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2017.

Municipal Bonds – At March 31, 2017, there were nine securities in a gross unrealized loss for less than 12 months. These securities are backed by local municipalities/school districts located in the Commonwealth of Pennsylvania with an investment grade rating by one or more of the three following rating agencies (S&P, Moody’s or Fitch). As a result, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2017.

The amortized cost and fair value of debt securities, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The maturity table below excludes mortgage-backed securities because the contractual maturities of such securities are not indicative of actual maturities due to significant prepayments.

	March 31, 2017
	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in Thousands)
Due after one through five years	$	2,868	$	2,995	$	4,051	$	4,054
Due after five through ten years		20,603		20,228		33,042		32,702
Due after ten years		28,820		27,123		20,988		20,494
Total	$	52,291	$	50,346	$	58,081	$	57,250

During the both three and six month periods ended March 31, 2017 and 2016, the Company did not sell any securities.

During the both three and six month periods ended March 31, 2017 and 2016, the Company did not use investment securities as collateral for any of its FHLB advances.

20 

5. LOANS RECEIVABLE

Loans receivable consist of the following:

	March 31,			September 30,
	2017			2016
	(Dollars in Thousands)
One-to-four family residential	$	365,425		$	233,531
Multi-family residential		13,710			12,478
Commercial real estate		95,853			79,859
Construction and land development		86,164			21,839
Commercial business		-			99
Leases		5,491			3,286
Consumer		7,442			799
Total loans		574,085			351,891
Undisbursed portion of loans-in-process		(45,173	)		(5,371	)
Deferred loan fees and (costs)		(3,131	)		1,697
Allowance for loan losses		(3,896	)		(3,269	)
Net loans	$	521,885		$	344,948

The following table summarizes by loan segment the balance in the allowance for loan losses and the loans individually and collectively evaluated for impairment by loan segment at March 31, 2017:

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Leases		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,350		122		862		1,035		28		135		364		3,896
Total ending allowance balance	$	1,350	$	122	$	862	$	1,035	$	28	$	135	$	364	$	3,896
Loans:
Individually evaluated for impairment	$	5,031	$	330	$	2,881	$	8,703	$	-	$	-			$	16,945
Collectively evaluated for impairment		360,394		13,380		92,972		77,461		5,491		7,442				557,140
Total loans	$	365,425	$	13,710	$	95,853	$	86,164	$	5,491	$	7,442			$	574,085

21 

The following table summarizes by loan segment the balance in the allowance for loan losses and the loans individually and collectively evaluated for impairment by loan segment at September 30, 2016:

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Commercial business		Leases		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,627		137		859		316		1		21		10		298		3,269
Total ending allowance balance	$	1,627	$	137	$	859	$	316	$	1	$	21	$	10	$	298	$	3,269
Loans:
Individually evaluated for impairment	$	5,553	$	335	$	3,154	$	10,288	$	99	$	-	$	-			$	19,429
Collectively evaluated for impairment		227,978		12,143		76,705		11,551		-		3,286		799				332,462
Total loans	$	233,531	$	12,478	$	79,859	$	21,839	$	99	$	3,286	$	799			$	351,891

The loan portfolio is segmented at a level that allows management to monitor both risk and performance. Management evaluates for potential impairment all construction, multi-family, commercial real estate, commercial business loans, and leases and all loans and leases more than 90 days delinquent as to principal and/or interest. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect in full the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.

Once the determination is made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is generally measured by comparing the recorded investment in the loan to the fair value of the loan using one of the following three methods: (a) the present value of the expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs. Management primarily utilizes the fair value of collateral method as a practically expedient alternative. On collateral method evaluations, any portion of the loan deemed uncollectible is charged-off against the loan loss allowance.

22 

The following table presents impaired loans by class as of March 31, 2017, segregated by those for which a specific allowance was required and those for which a specific allowance was not required.

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	5,031	$	5,031	$	5,394
Multi-family residential		-		-		330		330		330
Commercial real estate		-		-		2,881		2,881		2,881
Construction and land development		-		-		8,703		8,703		10,522
Total loans	$	-	$	-	$	16,945	$	16,945	$	19,127

The following table presents impaired loans by class as of September 30, 2016, segregated by those for which a specific allowance was required and those for which a specific allowance was not required.

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	5,553	$	5,553	$	5,869
Multi-family		-		-		335		335		335
Commercial real estate		-		-		3,154		3,154		3,154
Construction and land development		-		-		10,288		10,288		10,288
Commercial loans		-		-		99		99		99
Total loans	$	-	$	-	$	19,429	$	19,429	$	19,745

23 

The following tables present the average recorded investment in impaired loans and related interest income recognized for the periods indicated:

	Three Months Ended March 31, 2017
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	6,086	$	32	$	33
Multi-family residential		330		6		-
Commercial real estate		2,801		17		-
Construction and land development		9,607		-		-
Total loans	$	18,824	$	55	$	33
	Three Months Ended March 31, 2016
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	5,069	$	20	$	29
Multi-family residential		345		-		-
Commercial real estate		3,703		27		-
Construction and land development		9,410		126		-
Total loans	$	18,527	$	173	$	29
	Six Months Ended March 31, 2017
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	5,909	$	49	$	58
Multi-family residential		332		12		-
Commercial real estate		2,919		35		12
Construction and land development		9,834		-		-
Total loans	$	18,994	$	96	$	70

24 

	Six Months Ended March 31, 2016
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	4,781	$	43	$	59
Multi-family residential		348		-		-
Commercial real estate		3,725		42		12
Construction and land development		9,206		252		64
Total loans	$	18,060	$	337	$	135

Federal regulations and our loan policy require that the Company utilize an internal asset classification system as a means of reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, consistent with Federal banking regulations, as a part of its credit monitoring system. Management currently classifies problem and potential problem assets as “special mention”, “substandard,” “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the three aforementioned categories but possess weaknesses are required to be designated “special mention.”

The following tables present the classes of the loan portfolio in which a formal risk weighting system is utilized summarized by the aggregate “Pass” and the criticized category of “special mention”, and the classified categories of “substandard”, “doubtful” and “loss” within the Company’s risk rating system as applied to the loan portfolio. The Company had no loans classified as “doubtful” or “loss” at either of the dates presented.

	March 31, 2017
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	-	$	1,657	$	574	$	2,231
Multi-family residential		13,710		-		-		13,710
Commercial real estate		92,208		1,469		2,176		95,853
Construction and land development		77,461		-		8,703		86,164
Total loans	$	183,379	$	3,126	$	11,453	$	197,958

25 

	September 30, 2016
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	-	$	1,681	$	1,212	$	2,893
Multi-family residential		12,144		-		334		12,478
Commercial real estate		76,185		943		2,731		79,859
Construction and land development		11,551		-		10,288		21,839
Commercial business		99		-		-		99
Total loans	$	99,979	$	2,624	$	14,565	$	117,168

The Company evaluates the classification of one-to-four family residential and consumer loans primarily on a pooled basis. If the Company becomes aware that adverse or distressed conditions exist that may affect a particular single-family residential loan, the loan is downgraded following the above definitions of special mention, substandard, doubtful and loss.

The following tables represent loans in which a formal risk rating system is not utilized, but loans are segregated between performing and non-performing based primarily on delinquency status. Non-performing loans that would be included in the table are those loans greater than 90 days past due as to principal and/or interest that do not have a designated risk rating.

	March 31, 2017
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	356,816	$	6,378	$	363,194
Leases		5,491		-		5,491
Consumer		7,442		-		7,442
Total loans	$	369,749	$	6,378	$	376,127
	September 30, 2016
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	226,394	$	4,244	$	230,638
Leases		3,286		-		3,286
Consumer		799		-		799
Total loans	$	230,479	$	4,244	$	234,723

26 

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is due or overdue, as the case may be. The following table presents the loan categories of the loan portfolio summarized by the aging categories of performing and delinquent loans and nonaccrual loans:

	March 31, 2017
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	361,265	$	1,034	$	3,126	$	-	$	1,034	$	365,425	$	6,378
Multi-family residential		13,710		-		-		-		-		13,710		-
Commercial real estate		94,247		260		1,346		-		260		95,853		1,346
Construction and land development		77,469		-		8,695		-		-		86,164		8,695
Leases		5,402		89		-		-		89		5,491		-
Consumer		7,436		6		-		-		6		7,442		-
Total loans	$	559,529	$	1,389	$	13,167	$	-	$	1,389	$	574,085	$	16,419
	September 30, 2016
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	228,904	$	1,860	$	2,767	$	-	$	1,860	$	233,531	$	4,244
Multi-family residential		12,478		-		-		-		-		12,478		-
Commercial real estate		78,513		-		1,346		-		-		79,859		1,346
Construction and land development		11,551		-		10,288		-		-		21,839		10,288
Commercial business		99		-		-		-		-		99		-
Leases		3,286		-		-		-		-		3,286		-
Consumer		799		-		-		-		-		799		-
Total loans	$	335,630	$	1,860	$	14,401	$	-	$	1,860	$	351,891	$	15,878

The allowance for loan losses is established through a provision for loan losses charged to expense. The Company maintains the allowance at a level believed to cover all known and inherent losses in the portfolio that are both probable and reasonable to estimate at each reporting date. Management reviews the allowance for loan losses no less than quarterly in order to identify these inherent losses and to assess the overall collection probability for the loan portfolio in view of these inherent losses. For each primary type of loan, a loss factor is established reflecting an estimate of the known and inherent losses in such loan type contained in the portfolio using both a quantitative analysis as well as consideration of qualitative factors. The evaluation process includes, among other things, an analysis of delinquency trends, non-performing loan trends, the level of charge-offs and recoveries, prior loss experience, total loans outstanding, the volume of loan originations, the type, size and geographic concentration of the Company’s loans, the value of collateral securing the loans, the borrowers’ ability to repay and repayment performance, the number of loans requiring heightened management oversight, local economic conditions and industry experience.

27 

Commercial real estate loans entail significant additional credit risks compared to owner-occupied one-to-four family residential mortgage loans, as they generally involve large loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment experience on loans secured by income-producing properties typically depends on the successful operation of the related real estate project and/or business operation of the borrower who is, in some cases, also the primary occupant, and thus may be subject to a greater extent to the effects of adverse conditions in the real estate market and in the economy in general. Commercial business loans typically involve a higher risk of default than residential loans of like duration since their repayment is generally dependent on the successful operation of the borrower’s business and the sufficiency of collateral, if any. Land acquisition, development and construction lending exposes the Company to greater credit risk than permanent mortgage financing. The repayment of land acquisition, development and construction loans depends upon the sale of the property to third parties or the availability of permanent financing upon completion of all improvements. These events may adversely affect the sale of the properties, potentially reducing both the borrowers’ ability to make required payments as well as reducing the value of the collateral property. Such lending is additionally subject to the risk that if the estimate of construction cost proves to be inaccurate, the Company potentially will be compelled to advance additional funds to allow completion of the project. In addition, if the estimate of value proves to be inaccurate, the Company may be confronted with a project, when completed, having less value than the loan amount. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company would be able to recover the entire unpaid portion of the loan.

The following tables summarize the primary segments of the allowance for loan losses. Activity in the allowance is presented for the both three and six month periods ended March 31, 2017 and 2016:

	Three Months Ended March 31, 2017
	One- to four-family residential			Multi- family residential			Commercial real estate			Construction and land development			Leases		Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at December 31, 2016	$	1,564		$	135		$	963		$	415		$	28	$	35		$	314	$	3,454
Charge-offs		(113	)		-			-			(1,819	)		-		(16	)		-		(1,948	)
Recoveries		25			-			-			-			-		-			-		25
Provision		(126	)		(13	)		(101	)		2,439			-		116			50		2,365
ALLL balance at March 31, 2017	$	1,350		$	122		$	862		$	1,035		$	28	$	135		$	364	$	3,896

	Six Months Ended March  31, 2017
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Commercial business			Leases		Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2016	$	1,627		$	137		$	859	$	316		$	1		$	21	$	10		$	298	$	3,269
Charge-offs		(113	)		-			-		(1,819	)		-			-		(16	)		-		(1,948	)
Recoveries		25			-			-		-			-			-		-			-		25
Provision		(189	)		(15	)		3		2,538			(1	)		7		141			66		2,550
ALLL balance at March 31, 2017	$	1,350		$	122		$	862	$	1,035		$	-		$	28	$	135		$	364	$	3,896

28 

	Three Months Ended March 31, 2016
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at December 31, 2016	$	1,471		$	58		$	359	$	757		$	8		$	266	$	2,919
Charge-offs		-			-			-		-			-			-		-
Recoveries		-			-			-		44			-			-		44
Provision		40			(15	)		69		(28	)		(1	)		10		75
ALLL balance at March 31, 2016	$	1,511		$	43		$	428	$	773		$	7		$	276	$	3,038
	Six Months Ended March  31, 2016
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2015	$	1,635		$	66		$	231	$	724		$	5		$	269	$	2,930
Charge-offs		(11	)		-			-		-			-			-		(11	)
Recoveries		-			-			-		44			-			-		44
Provision		(113	)		(23	)		197		5			2			7		75
ALLL balance at March 31, 2016	$	1,511		$	43		$	428	$	773		$	7		$	276	$	3,038

The Company recorded a provision for loan losses in the amount of $2.4 million and $2.6 million for the three and six months period ended March 31, 2017, respectively, compared to $75,000 for both of the comparable three and six months periods in 2016. During the quarter ended March 31, 2017, the Company recorded a $1.9 million charge off related to Company’s second largest borrowing relationship; the remainder of the increase was due to increased balances of construction and development and consumer loans,

At March 31, 2017, the Company had ten loans aggregating $6.9 million that were classified as troubled debt restructurings (“TDRs”). Three of such loans aggregating $4.9 million as of March 31, 2017 were classified as non-performing and were on non-accrual status: with regard to one of such loans in the amount of $1.4 million, management has concerns as to whether the borrower has sufficient cashflow to continue to make scheduled payments eventhough the borrower had made all agreed upon payments. The two remaining loans totaling $3.5 million of which $614,000 was charged off in the current quarter (which are part of the Company’s second largest lending relationship) are in default. The Company did not restructure any debt during the three and six month periods ended March 31, 2017 or during the three and six month periods ended March 31, 2016. Two loans on construction and development loans totaling $2.8 million and a commercial real estate loan for $730,000 were in default as of March 31, 2017. All three loans were a part of the group related loans extended to the Company’s second largest borrower.

29 

6. DEPOSITS

Deposits consist of the following major classifications:

	March 31,					September 30,
	2017					2016
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Money market deposit accounts	$	87,107		14.6	%	$	55,552		14.3	%
Interest-bearing checking accounts		54,763		9.2			34,984		9.3
Non interest-bearing checking accounts		9,272		1.6			3,804		0.7
Passbook, club and statement savings		107,335		18.0			70,924		18.2
Certificates maturing in six months or less		125,124		21.0			97,418		25.0
Certificates maturing in more than six months		211,509		35.6			126,519		32.5
Total	$	595,110		100.0	%	$	389,201		100.0	%

Certificates of $250,000 and over totaled $27.9 million as of March 31, 2017 and $17.0 million as of September 30, 2016.

7. ADVANCES FROM FEDERAL HOME LOAN BANK

Short-Term

The following table reflects the outstanding balances and related information of short-term borrowings from the FHLB.

	Three Months			Six Months
	Ended			Ended
(Dollar amount in thousands)	March 31, 2016			March 31, 2016
Balance at quarter-end	$	27,000		$	27,000
Average balance outstanding		27,000			23,500
Maximum month-end balance		27,000			27,000
Weight-average rate at period end		1.00	%		1.00	%
Weight-average rate during the period		1.00	%		1.00	%

There were no short-term borrowings outstanding for the three and six month periods ended March 31, 2016.

As of March 31, 2017, $20.0 million of the outstanding balance is related to two $10.0 million 30 day FHLB advance associated with an interest rate swap contract with a weighted average effective cost of 117 basis points.

30 

Average balances outstanding during the year represent daily average balance and interest rates represent interest expense divided by the related average balance.

The Bank maintains borrowing facilities with the FHLB and Federal Reserve Bank and the terms and interest rate are subject to change on the date of execution.

Long-Term

Pursuant to collateral agreement with the FHLB of Pittsburgh, advances are secured by a blanket collateral of loans held by the Bank and qualifying fixed-income securities and FHLB stock. The long-term advances outstanding as of March 31, 2017 are as follows:

Type	Maturity Date	Amount		Coupon			Call Date
		(dollars in thousands)
Fixed Rate -Advance	17-Nov-17		10,000		1.21	%	Not Applicable
Fixed Rate -Amortizing	1-Dec-17		1,511		1.16	%	Not Applicable
Fixed Rate -Advance	4-Dec-17		2,000		1.15	%	Not Applicable
Fixed Rate -Advance	19-Mar-18		4,939		2.53	%	Not Applicable
Fixed Rate -Advance	19-Mar-18		4,959		2.13	%	Not Applicable
Fixed Rate -Advance	20-Jun-18		2,981		1.86	%	Not Applicable
Fixed Rate -Advance	25-Jun-18		2,973		2.09	%	Not Applicable
Fixed Rate -Advance	27-Aug-18		6,729		4.15	%	Not Applicable
Fixed Rate -Advance	15-Nov-18		2,980		1.89	%	Not Applicable
Fixed Rate -Advance	16-Nov-18		7,500		1.40	%	Not Applicable
Fixed Rate -Advance	26-Nov-18		1,989		2.35	%	Not Applicable
Fixed Rate -Advance	3-Dec-18		3,000		1.54	%	Not Applicable
Fixed Rate -Advance	16-Aug-19		2,929		2.66	%	Not Applicable
Fixed Rate -Advance	9-Oct-19		1,958		2.54	%	Not Applicable
Fixed Rate -Amortizing	18-Nov-19		4,098		1.53	%	Not Applicable
Fixed Rate -Advance	26-Nov-19		2,949		1.81	%	Not Applicable
Fixed Rate -Advance	22-Jun-20		2,927		2.64	%	Not Applicable
Fixed Rate -Advance	24-Jun-20		1,936		2.85	%	Not Applicable
Fixed Rate -Advance	27-Jul-20		2,049		1.38	%	Not Applicable
Fixed Rate -Advance	17-Aug-20		1,921		3.06	%	Not Applicable
Fixed Rate -Advance	9-Oct-20		1,929		2.92	%	Not Applicable
Fixed Rate -Advance	27-Jul-21		249		1.52	%	Not Applicable
Fixed Rate -Advance	28-Jul-21		249		1.48	%	Not Applicable
Fixed Rate -Advance	28-Jul-21		249		1.42	%	Not Applicable
Fixed Rate -Advance	19-Aug-21		249		1.55	%	Not Applicable
Fixed Rate -Advance	7-Oct-21		1,899		3.19	%	Not Applicable
Fixed Rate -Advance	12-Oct-21		1,905		3.23	%	Not Applicable
		$	79,057		2.15	%	(a)
(a) Weighted average coupon rate.

31 

8. DERIVATIVES

The Company has contracted with a third party to participate in pay-fixed interest rate swap contracts. The amount of swaps outstanding at March 31, 2017 is being utilized to hedge $21.1 million in floating-rate debt consisting of FHLB advances.

Below is a summary of the interest rate swap agreements and the terms there of as of March 31, 2017.

	March 31, 2017
	Notional		Pay			Receive	Maturity	Unrealized
	Amount		Rate			Rate	Date	Gain
						(dollar in thousands)
Interest rate swap contract	$	10,000		1.15	%	1 Month Libor	6-Apr-21	$	250
Interest rate swap contract		10,000		1.18	%	1 Month Libor	13-Jun-21		260
Interest rate swap contract		1,100		4.10	%	1 Month Libor +276 bp	1-Aug-26		72
								$	582

All three interest rate swaps are carried at fair value in accordance with FASB ASC 815 "Derivatives and Hedging."

Below is a summary of the interest rate swap agreement and the terms as of September 30, 2016. They are the same swap agreement that were in force as of March 31, 2017.

	September 30, 2016
	Notinal		Pay			Receive	Maturity	Unrealized
	Amount		Rate			Rate	Date	Loss
						(dollar in thousands)
Interest rate swap contract	$	10,000		1.15	%	1 Mth Libor	6-Apr-21	$	(92	)
Interest rate swap contract		10,000		1.18	%	1 Mth Libor	13-Jun-21		(103	)
Interest rate swap contract		1,100		4.10	%	1 Mth Libor +276 bp	1-Aug-26		(7	)
								$	(202	)

All three interest swaps are carried at fair value in accordance with FASB ASC 815 “Derivatives and Hedging.”

32 

9. INCOME TAXES

Items that gave rise to significant portions of deferred income taxes are as follows:

	March 31,			September 30,
	2017			2016
Deferred tax assets:	(Dollars in Thousands)
Allowance for loan losses	$	1,593		$	1,289
Nonaccrual interest		292			163
Accrued vacation		12			13
Capital loss carryforward		378			378
Split dollar life insurance		18			18
Post-retirement benefits		93			96
Unrealized losses on available for sale securities		860			-
Goodwill		2,042			-
Unrealized losses on interest rate swaps		-			69
Employee benefit plans		382			434
Total deferred tax assets		5,670			2,460
Valuation allowance		(378	)		(378	)
Total deferred tax assets, net of valuation allowance		5,292			2,082
Deferred tax liabilities:
Property		423			423
Unrealized gains on available for sale securities		-			500
Unrealized gains on interest rate swaps		198			-
Miscellaneous		12			12
Deferred loan fees		455			578
Total deferred tax liabilities		1,088			1,513
Net deferred tax assets	$	4,204		$	569

The Company establishes a valuation allowance for deferred tax assets when management believes that the use of the deferred tax assets is not likely to be fully realized through a carry back to taxable income in prior years or future reversals of existing taxable temporary differences, and/or to a lesser extent, future taxable income. The tax deduction generated by the redemption of the shares of a mutual fund held by the Bank and the subsequent impairment charge on the assets acquired through the redemption in kind are considered capital losses and can only be utilized to the extent of capital gains recognized over a five year period, resulting in the establishment of a valuation allowance for the carryforward period. The valuation allowance totaled $378,000 at March 31, 2017 and September 30, 2016.

There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statements of Operations as a component of income tax expense. The Company’s federal and state income tax returns for taxable years through September 30, 2013 have been closed for purposes of examination by the Internal Revenue Service and the Pennsylvania Department of Revenue.

33 

10. STOCK COMPENSATION PLANS

As of December 31, 2016, the Boards of Directors of the Company and the Bank voted to terminate the Bank’s employee stock ownership plan (“ESOP”) effective December 31, 2016. The Company has submitted the proper notices with the Internal Revenue Service and is awaiting receipt of a determination letter in connection with the termination of the ESOP before the final allocation is made to the individual participants. The Bank maintained an ESOP for substantially for the benefit all its full-time employees. The ESOP purchased 427,057 shares (on a converted basis) of common stock for an aggregate cost of approximately $4.5 million in fiscal 2005 in connection with the Bank’s mutual holding company reorganization. The ESOP purchased in connection with the second-step conversion of the Bank an additional 255,564 shares during December 2013 and an additional 30,100 shares at the beginning of January 2014, of the Company’s common stock for an aggregate cost of approximately $3.1 million. The shares were purchased with the proceeds of two loans from the Company. Shares of the Company’s common stock purchased by the ESOP are held in a suspense account until released for allocation to participants as the loans are repaid. Shares are allocated to each eligible participant based on the ratio of each such participant’s compensation, as defined in the ESOP, to the total compensation of all eligible plan participants. As the unearned shares are released from the suspense account, the Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares upon release differs from the cost of such shares, the difference is charged or credited to equity as additional paid-in capital. As of March 31, 2017, the ESOP held 468,156 shares of which a total of 243,734 shares were allocated to participants and had committed to release an additional 35,517 shares as of December 31, 2016. For the six months ended March 31, 2017 and 2016, the Company recognized $139,000 and $265,000, respectively, in compensation expense related to the ESOP. In connection with the termination of the ESOP, the ESOP was required to repay the outstanding indebtness the collateral held in the suspense account. As of January 1, 2017, the Company and Trust purchased from the ESOP 303,115 shares of common stock to pay off the remaining $5.2 million of the outstanding loan balances. Approximately 115,000 unallocated shares remain after the repayment of the indebtness will be distributed to the remaining active plan participants.

The Company maintains the 2008 RRP which is administered by a committee of the Board of Directors of the Company. The RRP provides for the grant of shares of common stock of the Company to officers, employees and directors of the Company. In order to fund the grant of shares under the RRP, the 2008 RRP purchased 213,528 shares (on a converted basis) of the Company’s common stock in the open market for an aggregating cost of approximately $2.5 million, at an average purchase price per share of $11.49. The Company made sufficient contributions to the 2008 RRP to fund these purchases. As of March 31, 2017, all the shares had been awarded as part of the 2008 RRP. Shares subject to awards under the 2008 RRP generally vest at the rate of 20% per year over five years. During February 2015, shareholders approved the 2014 Stock Incentive Plan (the “2014 SIP”). As part of the 2014 SIP, a maximum of 285,655 shares of common stock can be awarded as restricted stock awards or units, of which 233,500 shares were awarded during February 2015 of which 45,000 shares have been forfeited as of March 31, 2017. In August 2016, the Company granted 7,473 shares under the 2008 RRP an 3,027 shares under the 2014 SIP. In March 2017, the Company granted 17,128 shares under the 2014 SIP.

Compensation expense related to the shares subject to restricted stock awards granted is recognized ratably over the five-year vesting period in an amount which totals the grant date fair value multiplied by the number of shares subject to the grant. During the three and six months ended March 31, 2017, an aggregate of $145,000 and $280,000, respectively was recognized in compensation expense for the grants pursuant to the 2008 RRP and the grants pursuant to the 2014 SIP. An income tax benefit of $95,000 and $39,000, was recognized for the three and six months ended March 31, 2017, respectively. During the three and six months ended March 31, 2016, $115,000 and $243,000 was recognized in compensation expense for the grants pursuant to the 2008 RRP and the grants pursuant to the 2014 SIP. An income tax benefit of $39,000 and $83,000 was recognized for the three and six months ended March 31, 2016. At March 31, 2017, approximately $1.3 million in additional compensation expense for shares awarded related to the 2008 RRP and 2014 SIP remained unrecognized.

A summary of the Company’s non-vested stock award activity for the six months ended March 31, 2017 and 2016 is presented in the following tables:

34 

	Six Months Ended March 31, 2017
	Number of Shares (1)			Weighted Average Grant Date Fair Value
Nonvested stock awards at October 1, 2016		172,788		$	12.03
Granted		17,128			17.43
Forfeited		-			-
Vested		(43,018	)		11.61
Nonvested stock awards at the March 31, 2017		146,898		$	12.78
	Six Months Ended March 31, 2016
	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested stock awards at October 1, 2015		241,428		$	11.74
Granted		-			-
Forfeited		(36,762	)		11.55
Vested		(49,511	)		11.47
Nonvested stock awards at the March 31, 2016		155,155		$	11.87

The Company maintains the 2008 Stock Option Plan (the “2008 Option Plan”) which authorizes the grant of stock options to officers, employees and directors of the Company to acquire shares of common stock with an exercise price at least equal to the fair market value of the common stock on the grant date. Options generally become vested and exercisable at the rate of 20% per year over five years and are generally exercisable for a period of ten years after the grant date. A total of 533,808 shares of common stock were approved for future issuance pursuant to the 2008 Stock Option Plan. As of March 31, 2017, all of the options had been awarded under the 2008 Option Plan. As of March 31, 2017, 467,758 options (on a converted basis) were vested under the 2008 Option Plan. The 2014 SIP reserved up to 714,145 shares for issuance pursuant to options. Options to purchase 587,112 shares were awarded during February 2015, 608,737 shares pursuant to the 2014 SIP and the remainder pursuant to the 2008 Option Plan. During August 2016 the Company granted 18,866 shares under the 2008 Option Plan and 8,634 shares under the 2014 SIP. In March 2017, the Company granted 22,828 shares under the 2014 SIP.

A summary of the status of the Company’s stock options under the 2008 Option Plan and the 2014 SIP as of March 31, 2017 and 2016 are presented below:

35 

	Six Months Ended March 31, 2017
	Number of Shares			Weighted Average Exercise Price
Outstanding at October 1, 2016		921,909		$	11.70
Granted		22,828			11.43
Exercised		(32,224	)		11.50
Forfeited		-			-
Outstanding at  March 31, 2017		912,513		$	11.85
Exercisable at March 31, 2017		579,078		$	11.43
	Six Months Ended March 31, 2016
	Number of Shares			Weighted Average Exercise Price
Outstanding at October 1, 2015		1,074,430		$	11.92
Granted		-			-
Exercised		(130,535	)		11.49
Forfeited		(93,939	)		11.55
Outstanding at March 31, 2016		849,956		$	12.03
Exercisable at March 31, 2016		347,037		$	11.38

The weighted average remaining contractual term was approximately 4.7 years for options outstanding as of March 31, 2017.

The estimated fair value of options granted during fiscal 2009 was $2.98 per share, $2.92 for options granted during fiscal 2010, $3.34 for options granted during fiscal 2013, $4.67 for the options granted during fiscal 2014, $4.58 for options granted during fiscal 2015, $2.13 for options granted during fiscal 2016 and $3.18 for options granted during fiscal 2017. The fair value for grants made in fiscal 2015 was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: an exercise and fair value of $12.23, expected term of seven years, volatility rate of 38.16%, interest rate of 1.62% and a yield of 0.98%. The fair value for grants made in fiscal 2016 was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: an exercise and fair value of $14.42, expected term of seven years, volatility of 13.82%, interest rate of 1.36% and a yield of 0.80%. The fair value for grants made in March 2017 was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: an exercise and fair value of $17.43, expected term of seven years, volatility of 14.4%, interest rate of 2.22% and a yield of 0.69%.

During the three and six months ended March 31, 2017, $138,000 and $268,000, respectively, was recognized in compensation expense for options granted pursuant to the 2008 Option Plan and the 2014 SIP. A tax benefit of $16,000 and $32,000 was recognized for the three and six months ended March 31, 2017, respectively. During the three and six months ended March 31, 2016, $112,000 and $248,000, respectively, was recognized in compensation expense for options granted pursuant to the 2008 Option Plan and the 2014 SIP. A tax benefit of $13,000 and $29,000, respectively, was recognized for the three and six months ended March 31, 2016.

At March 31, 2017, there was approximately $1.4 million in additional compensation expense to be recognized for awarded options which remained outstanding and unvested at such date. The weighted average period over which this expense will be recognized is approximately 3.1 years.

36 

11. COMMITMENTS AND CONTINGENT LIABILITIES

At March 31, 2017, the Company had $13.9 million in outstanding commitments to originate fixed-rate loans with market interest rates ranging from 4.00% to 5.50%. At September 30, 2016, the Company had $9.9 million in outstanding commitments to originate fixed-rate loans with market interest rates ranging from 3.75% to 5.0%. The aggregate undisbursed portion of loans-in-process amounted to $45.2 million at March 31, 2017 and $5.4 million at September 30, 2016.

The Company also had commitments under unused lines of credit of $7.2 million as of March 31, 2017 and $3.3 million as of September 30, 2016 and letters of credit outstanding of $1.5 million as of March 31, 2017 and $1.9 million as of September 30, 2016.

Among the Company’s contingent liabilities are exposures to limited recourse arrangements with respect to the Company’s sales of whole loans and participation interests. At March 31, 2017, the exposure, which represents a portion of credit risk associated with the interests sold, amounted to $1.9 million related to loans sold to FHLB. This exposure is for the life of the related loans and payables, on our proportionate share, as actual losses are incurred. These loans are seasoned loans and remain performing.

The Company is involved in various legal proceedings occurring in the ordinary course of business. Management of the Company, based on discussions with litigation counsel, believes that such proceedings will not have a material adverse effect on the financial condition, operations or cash flows of the Company. However, there can be no assurance that any of the outstanding legal proceedings to which the Company is a party will not be decided adversely to the Company's interests and not have a material adverse effect on the financial condition and operations of the Company.

12. FAIR VALUE MEASUREMENT

The fair value estimates presented herein are based on pertinent information available to management as of March 31, 2017 and September 30, 2016, respectively. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Generally accepted accounting principles used in the United States establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.

The three broad levels of hierarchy are as follows:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

37 

Those assets as of March 31, 2017 which are to be measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	20,945	$	-	$	20,945
Mortgage-backed securities - U.S. Government agencies		-		132,792		-		132,792
Corporate bonds		-		36,755		-		36,755
FHLMC preferred stock		66		-		-		66
Interest rate swap contracts		-		582		-		582
Total	$	66	$	190,624	$	-	$	190,690

Those assets as of September 30, 2016 which are measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	21,024	$	-	$	21,024
Mortgage-backed securities - U.S. Government agencies		-		91,575		-		91,575
Corporate bonds		-		26,053		-		26,053
FHLMC preferred stock		42		-		-		42
Total	$	42	$	138,652	$	-	$	138,694
Liabilities:
Interest rate swap contracts	$	-	$	202	$	-	$	202
Total	$	-	$	202	$	-	$	202

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans and real estate owned at fair value on a non-recurring basis.

Impaired Loans

The Company considers loans to be impaired when it becomes more likely than not that the Company will be unable to collect all amounts due (principle and interest) in accordance with the contractual terms of the loan agreements. Collateral dependent impaired loans are based on the fair value of the collateral which is based on appraisals and would be categorized as Level 2 measurement.  In some cases, adjustments are made to the appraised values for various factors including the age of the appraisal, age of the comparable included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement. These loans are reviewed for impairment and written down to their net realizable value by charges against the allowance for loan losses. The collateral underlying these loans had a fair value in excess of $16.9 million as of March 31, 2017.

38 

Real Estate Owned

Once an asset is determined to be uncollectible, the underlying collateral is generally repossessed and reclassified to foreclosed real estate and repossessed assets. These repossessed assets are carried at the lower of cost or fair value of the collateral, based on independent appraisals, less cost to sell and would be categorized as Level 2 measurement. In some cases, adjustments are made to the appraised values for various factors including age of the appraisal, age of the comparable included in the appraisal, and known changes in the market and in the collateral. As a result, the evaluations are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement.

Summary of Non-Recurring Fair Value Measurements

	At March 31, 2017
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	16,945	$	16,945
Real estate owned		-		-		192		192
Total	$	-	$	-	$	17,137	$	17,137
	At September 30, 2016
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	19,429	$	19,429
Real estate owned		-		-		581		581
Total	$	-	$	-	$	20,010	$	20,010

The following table provides information describing the valuation processes used to determine nonrecurring fair value measurements categorized within Level 3 of the fair value hierarchy:

	At March 31, 2017
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	16,945	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	6% to 46% discount/ 10%
Real estate owned	$	192	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

39 

	At September 30, 2016
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	19,429	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	6% to 46% discount/10%
Real estate owned	$	581	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various Level 3 inputs, which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

The fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

40 

					Fair Value Measurements at
					March 31, 2017
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	13,058	$	13,058	$	13,058	$	-	$	-
Certificate of deposits		1,853		1,853		1,853		-		-
Investment and mortgage-backed securities available for sale		190,108		190,108		66		190,042		-
Investment and mortgage-backed securities held to maturity		58,197		56,540		-		56,540		-
Loans receivable, net		521,885		524,148		-		-		524,148
Accrued interest receivable		2,626		2,626		2,626		-		-
Other real estate owned		192		192		192		-		-
Federal Home Loan Bank stock		5,699		5,699		5,699		-		-
Bank owned life insurance		27,709		27,709		27,709		-		-
Interest rate swap contracts		582		582		-		582		-
Liabilities:
Checking accounts		64,035		64,035		64,035		-		-
Money market deposit accounts		87,107		87,107		87,107		-		-
Passbook, club and statement savings accounts		107,335		107,335		107,335		-		-
Certificates of deposit		336,633		338,846		-		-		338,846
Advances from FHLB short-term		27,000		27,000		27,000				-
Advances from FHLB long-term		79,057		78,271		-		-		78,271
Accrued interest payable		790		790		790		-		-
Advances from borrowers for taxes and insurance		2,789		2,789		2,789		-		-

41 

					Fair Value Measurements at
					September 30, 2016
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	12,440	$	12,440	$	12,440	$	-	$	-
Certificate of deposits		1,853		1,853		1,853		-		-
Investment and mortgage-backed securities available for sale		138,694		138,694		42		138,652		-
Investment and mortgage-backed securities held to maturity		39,971		40,700		-		40,700		-
Loans receivable, net		344,948		344,100		-		-		344,100
Accrued interest receivable		1,928		1,928		1,928		-		-
Federal Home Loan Bank stock		2,463		2,463		2,463		-		-
Bank owned life insurance		13,055		13,055		13,055		-		-
Liabilities:
Checking accounts		38,788		38,788		38,788		-		-
Money market deposit accounts		55,552		55,552		55,552		-		-
Passbook, club and statement savings accounts		70,924		70,924		70,924		-		-
Certificates of deposit		223,937		225,383		-		-		225,383
Accrued interest payable		1,403		1,403		1,403		-		-
Advances from FHLB -short-term		20,000		20,000		20,000		-		-
Advances from FHLB -long-term		30,638		30,222		-		-		30,222
Advances from borrowers for taxes and insurance		1,748		1,748		1,748		-		-
Interest rate swap contracts		202		202		-		202		-

Cash and Cash Equivalents—For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

Investments and Mortgage-Backed Securities—The fair value of investment securities and mortgage-backed securities is based on quoted market prices, dealer quotes, and prices obtained from independent pricing services.

Loans Receivable—The fair value of loans is estimated based on present value using the current market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The carrying value that fair value is compared to is net of the allowance for loan losses and other associated premiums and discounts. Due to the significant judgment involved in evaluating credit quality, loans are classified within Level 3 of the fair value hierarchy.

Accrued Interest Receivable – For accrued interest receivable, the carrying amount is a reasonable estimate of fair value.

Federal Home Loan Bank (FHLB) Stock—Although FHLB stock is an equity interest in an FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. The estimated fair value approximates the carrying amount.

42 

Bank Owned Life Insurance—The fair value of bank owned life insurance is based on the cash surrender value obtained from an independent advisor that is derivable from observable market inputs.

Checking Accounts, Money Market Deposit Accounts, Passbook Accounts, Club Accounts, Statement Savings Accounts, and Certificates of Deposit—The fair value of passbook accounts, club accounts, statement savings accounts, checking accounts, and money market deposit accounts is the amount reported in the financial statements. The fair value of certificates of deposit is based on market rates currently offered for deposits of similar remaining maturity.

Short-term Advances from Federal Home Loan Bank—The fair value of advances from FHLB is the amount payable on demand at the reporting date.

Long-term Advances from Federal Home Loan Bank — The fair value of advances from FHLB is the amount payable on demand at the reporting date.

Accrued Interest Payable – For accrued interest payable, the carrying amount is a reasonable estimate of fair value.

Interest rate swaps – The fair values of the interest rate swap contracts are based upon the estimated amount the Company would receive or pay, as applicable, to terminate the contracts.

Advances from borrowers for taxes and insurance – For advances from borrowers for taxes and insurance, the carrying amount is a reasonable estimate of fair value.

Commitments to Extend Credit and Letters of Credit—The majority of the Bank’s commitments to extend credit and letters of credit carry current market interest rates if converted to loans. Because commitments to extend credit and letters of credit are generally unassignable by either the Bank or the borrower, they only have value to the Bank and the borrower. The estimated fair value approximates the recorded deferred fee amounts, which are not significant.

13. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company’s goodwill and intangible assets are related to the acquisition of Polonia Bancorp on January 1, 2017.

	Balance							Balance
	January 1,		Additions/					March 31,		Amortization
	2017		Adjustments		Amortization			2017		Period
Goodwill	$	-	$	7,163	$	-		$	7,163
Core deposit intangible		-		822		(37	)		785		10 years
	$	-	$	7,985	$	(37	)	$	7,948

As of March 31, 2017, the current fiscal year and the future amortization fiscal periods expense for the core deposit intangible is:

(in thousands)
2017	$	75
2018		142
2019		127
2020		112
Thereafter		366

43 

14. BUSINESS COMBINATIONS

On January 1, 2017, the previously announced proposed acquisition (the “Merger”) of Polonia Bancorp pursuant to the Agreement of Plan of Merger by and between Polonia Bancorp and the Company, dated as of June 2, 2016 (the “ Merger Agreement”) was completed. The shareholders of Polonia Bancorp had the option to receive $11.09 per share in cash or 0.7460 of a share of the Company common stock for each share of Polonia Bancorp common stock held thereby, subject to allocation provisions to assure that, in the aggregate, Polonia Bancorp shareholders received total merger consideration that consisted of 50% stock and 50% cash. As a result of Polonia Bancorp shareholder stock and cash elections and the related proration provisions of the Merger Agreement, the Company issued 1,274,197 shares of its common stock and approximately $18.9 million was paid in cash for the Merger.

In connection with the Merger, the consideration paid and the estimated fair value of identifiable assets and liabilities assumed as of the date of the Merger are summarized in the following table:

(dollars in thousands)
Consideration paid:
Common stock issued (1,274,197 shares) at a fair value per share of $17.12 per share.	$	21,814
Cash for common stock exchanged		18,944
Cash in lieu of fractional shares		1
		40,759
Assets acquired:
Cash and due from banks		47,901
Investments available for sale		42,164
Loans		160,157
Premises and equipment		6,902
Deferred taxes		3,921
Bank-owned life insurance		4,316
Core deposit intangible		822
Other assets		5,802
Total assets		271,985
Liabilities assumed:
Deposits		172,243
FHLB advances short-term		7,000
FHLB advances long -term		50,232
Other liabilities		8,914
Total liabilities		238,389
Net assets acquired		33,596
Goodwill resulting from the acquisition	$	7,163

The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed as of the date of acquisition of Polonia Bancorp. Core deposit intangibles will be amortized over a 10 years using an accelerated method. Goodwill will not be amortized, but instead will be evaluated for impairment.

(dollars in thousands, except per share data)
Purchase Consideration
Polonia Common Stock:
Total Shares of Common Stock Outstanding		3,416,311
Common Stock Issued Cap		1,708,155
Shares Redeemed for Cash Cap		1,708,156
Prudential Common Stock Issued (conversion rate 0.7460)		1,274,197
Prudential Closing Price at December 31, 2016	$	17.12
Cash-out rate paid per share for Polonia Common Stock	$	11.09
Purchase consideration assigned to Polonia shares exchanged for Prudential Common Stock	$	21,814
Cash Paid to Polonia for Polonia shares	$	18,943
Cash Paid for fractional shares	$	1
	$	40,758
Net Assets Acquired
Polonia stockholders' equity		35,412
Core deposit intangible assets		822
Estimated adjustments to reflect assets acquired at fair value:
Investment securities		(781	)
Portfolio loans		(4,643	)
Allowance for loan and lease losses		1,002
Premises		3,049
Other Assets		(74	)
Deferred Taxes		934
Total fair value adjustment to assets acquired		309
Estimated adjustments to reflect liabilities assumed at fair value:
Time deposits		894
Borrowings		1,232
Total fair value adjustment to liabilities assumed		2,126
Total net assets acquired		33,595
Goodwill resulting from merger		7,163

Pro Forma Income Statements

The following pro forma income statements for the three and six months ended March 31, 2017 and 2016 presents pro forma results of operations of the combined institution (Polonia Bancorp and the Company) had the merger occurred on January 1, 2017 and 2016. The pro forma income statement adjustments are limited to the effects of fair value mark amortization and accretion and intangible asset amortization. No cost savings or additional merger expenses have been included in the pro forma results of operations for the three and six months ended March 31, 2017 and 2016.

44 

	Three Months Ended
	March 31,
(dollars in thousands, except per share data)	2017			2016
Net interest income		5,299			5,534
Provision for loan and leases losses		2,365			75
Net interest income after provision for loan and lease losses		2,934			5,459
Non-interest income		518			530
Non-interest expenses		6,763			5,137
(Loss) income before income taxes		(3,311	)		852
Income tax (benefit) expense		(1,171	)		312
Net (loss) income		(2,140	)		540
Per share data
Weighed average basic shares outstanding		8,639,908			8,655,077
Dilutive shares		-			270,973
Adjusted weighted-average dilutive shares		8,639,908			8,926,050
Basic (loss) earnings per common share	$	0.28		$	0.06
Dilutive (loss) earnings per common share	$	0.28		$	0.06

(a) Weighted-average basis shares outstanding for both periods reflected are the Company’s weighted-average shares plus the 1,274,197, shares that were issued as consideration for the Merger. The dilutive shares reflect the Company’s estimated diluted shares for the period.

	Six Months Ended
	March 31,
(dollars in thousands, except per share data)	2017			2016
Net interest income		8,947			10,387
Provision for loan and leases losses		2,550			75
Net interest income after provision for loan and lease losses		6,397			10,312
Non-interest income		876			941
Non-interest expenses		9,483			10,403
(Loss) income before income taxes		(2,210	)		850
Income tax (benefit) expense		(801	)		(29	)
Net (loss) income		(1,409	)		879
Per share data
Weighed average basic shares outstanding		9,253,738			8,655,077
Dilutive shares		-			246,791
Adjusted weighted-average dilutive shares		9,253,738			8,901,868
Basic (loss) earnings per common share	$	(0.28	)	$	0.10
Dilutive (loss) earnings per common share	$	(0.28	)	$	0.10

(a) Weighted-average basis shares outstanding for both periods reflected are the Company’s weighted-average shares plus the 1,274,197, shares that were issued as consideration for the Merger. The dilutive shares reflect the Company’s estimated diluted shares for the period

45 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited consolidated financial statements included elsewhere in this Form 10-Q and with our Annual Report on Form 10-K for the year ended September 30, 2016 (the “Form 10-K”).

Overview. Prudential Bancorp, Inc. (the “Company”) was formed by Prudential Bancorp, Inc. of Pennsylvania to become the successor holding company for Prudential Bank (the “Bank”) as a result of the second-step conversion of the Bank completed in October 2013. The Company’s results of operations are primarily dependent on the results of the Bank, which is a wholly owned subsidiary of the Company. The Company’s results of operations depend to a large extent on net interest income, which primarily is the difference between the income earned on its loan and securities portfolios and the cost of funds, which is the interest paid on deposits and borrowings. Results of operations are also affected by our provisions for loan losses, non-interest income (which includes impairment charges) and non-interest expense. Non-interest expense principally consists of salaries and employee benefits, office occupancy expense, depreciation, data processing expense, payroll taxes and other expense. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable laws, regulations or government policies may materially impact our financial condition and results of operations. The Bank is subject to regulation by the Federal Deposit Insurance Corporation (the “FDIC”) and the Pennsylvania Department of Banking and Securities (the “Department”). The Bank’s main office is in Philadelphia, Pennsylvania (which includes a branch), with ten additional financial centers located in Philadelphia, Montgomery and Delaware Counties in Pennsylvania. The Bank’s primary business consists of attracting deposits from the general public and using those funds together with borrowings to originate loans and to invest primarily in U.S. Government and agency securities and mortgage-backed securities. In November 2005, the Bank formed PSB Delaware, Inc., a Delaware corporation, as a subsidiary of the Bank. In March 2006, all mortgage-backed securities then owned by the Company’s predecessor were transferred to PSB Delaware, Inc. PSB Delaware, Inc.’s activities are included as part of the consolidated financial statements.

Critical Accounting Policies. In reviewing and understanding financial information for the Company, you are encouraged to read and understand the significant accounting policies used in preparing our financial statements. These policies are described in Note 1 of the notes to our unaudited consolidated financial statements included in Item 1 hereof as well as in Note 2 to our audited consolidated financial statements included in the Form 10-K. The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments and assumptions, which are believed to be reasonable, based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as well as contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented. The following accounting policies comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods. Effective January 1, 2017, the Company completed its acquisition of Polonia Bancorp, Inc. (“Polonia Bancorp”) and its wholly owned subsidiary, Polonia Bank, pursuant to the terms of an Agreement and Plan of Merger dated June 2, 2016.

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses charged to expense. Losses are charged against the allowance for loan losses when management believes that the collectability in full of the principal of a loan is unlikely. Subsequent recoveries are added to the allowance. The allowance for loan losses is maintained at a level that management considers adequate to provide for estimated losses and impairments based upon an evaluation of known and inherent losses in the loan portfolio that are both probable and reasonable to estimate. Loan impairment is evaluated based on the fair value of collateral or estimated net realizable value. It is the policy of management to provide for losses on unidentified loans in its portfolio in addition to criticized and classified loans.

46 

Management monitors its allowance for loan losses at least quarterly and makes adjustments to the allowance through the provision for loan losses as economic conditions and other pertinent factors indicate. The quarterly review and adjustment of the qualitative factors employed in the allowance methodology and the updating of historic loss experience allow for timely reaction to emerging conditions and trends.  In this context, a series of qualitative factors are used in a methodology as a measurement of how current circumstances are affecting the loan portfolio. Included in these qualitative factors are:

· Levels of past due, classified, criticized and non-accrual loans, troubled debt restructurings and loan modifications;

· Nature and volume of loans;

· Changes in lending policies and procedures, underwriting standards, collections, charge-offs and recoveries and for commercial loans, the level of loans being approved with exceptions to the Bank’s lending policy;

· Experience, ability and depth of management and staff;

· National and local economic and business conditions, including various market segments;

· Quality of the Company’s loan review system and the degree of Board oversight;

· Concentrations of credit and changes in levels of such concentrations; and

· Effect of external factors on the level of estimated credit losses in the current portfolio.

In determining the allowance for loan losses, management has established a general pooled allowance. Values assigned to the qualitative factors and those developed from historic loss experience provide a dynamic basis for the calculation of reserve factors for both pass-rated loans (the general pooled allowance) and those for criticized and classified loans. The amount of the specific allowance is determined through an individual loan analysis of certain large dollar commercial real estate loans, construction and land development loans and multi-family loans. Under most circumstances, if a specific impairment is warranted then that portion of the loan will be immediately charged-off. Loans not individually reviewed are evaluated as a group using reserve factor percentages based on historical loss experience and the qualitative factors described above. In determining the appropriate level of the general pooled allowance, management makes estimates based on internal risk ratings, which take into account such factors as debt service coverage, loan-to-value ratios and external factors. Estimates are periodically measured against actual loss experience.

This evaluation is inherently subjective as it requires material estimates including, among others, exposure at default, the amount and timing of expected future cash flows on impaired loans, value of collateral, estimated losses on our commercial, construction and residential loan portfolios and historical loss experience. All of these estimates may be susceptible to significant change.

While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. In addition, the Department and the FDIC, as an integral part of their examination processes, periodically review our allowance for loan losses. The Department and the FDIC may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examination. To the extent that actual outcomes differ from management’s estimates, additional provisions to the allowance for loan losses may be required that would adversely affect earnings in future periods.

Investment and mortgage-backed securities available for sale.  Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated using quoted prices of securities with similar characteristics or discounted cash flows and are classified within Level 2 of the fair value hierarchy. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. There were no securities with a Level 3 classification as of March 31, 2017 or September 30, 2016. 

47 

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.   The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities. In addition, the Company also considers the likelihood that the security will be required to be sold because of regulatory concerns, our internal intent not to dispose of the security prior to maturity and whether the entire cost basis of the security is expected to be recovered. In determining whether the cost basis will be recovered, management evaluates other facts and circumstances that may be indicative of an “other-than-temporary” impairment condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost, and near-term prospects of the issuer.

In addition, certain assets are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans and real estate owned, both available-for-sale (“AFS”) and held-to-maturity (“HTM”), at fair value on a recurring basis.

Valuation techniques and models utilized for measuring financial assets and liabilities are reviewed and validated by the Company at least quarterly.

Income Taxes. The Company accounts for income taxes in accordance with U.S. GAAP. The Company records deferred income taxes that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Management exercises significant judgment in the evaluation of the amount and timing of the recognition of the resulting tax assets and liabilities. The judgments and estimates required for the evaluation are updated based upon changes in business factors and the tax laws. If actual results differ from the assumptions and other considerations used in estimating the amount and timing of tax recognized, there can be no assurance that additional expenses will not be required in future periods. 

In evaluating our ability to recover deferred tax assets, we consider all available positive and negative evidence, including our past operating results and our forecast of future taxable income. In determining future taxable income, we make assumptions for the amount of taxable income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require us to make judgments about our future taxable income and are consistent with the plans and estimates we use to manage our business. Any reduction in estimated future taxable income may require us to record an additional valuation allowance against our deferred tax assets. An increase in the valuation allowance would result in additional income tax expense in the period and could have a significant impact on our future earnings.

 U.S. GAAP prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated income statement.  Assessment of uncertain tax positions requires careful consideration of the technical merits of a position based on management's analysis of tax regulations and interpretations.  Significant judgment may be involved in the assessment of the tax position.

Forward-looking Statements. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, expectations or predictions of future financial or business performance, conditions relating to the Company or other effects of the merger of the Company and Polonia Bancorp. These forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond the Company’s control). The words “may,” “could,” “should,” “would,” “will,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements.

48 

In addition to factors previously disclosed in the reports filed by the Company with the Securities and Exchange commission (“SEC”) and those identified elsewhere in this Form 10-Q, the following factors, among others, could cause actual results to differ materially from forward looking statements or historical performance: difficulties and delays in integrating the Polonia Bancorp business or fully realizing anticipated cost savings and other benefits of the merger; business disruptions following the merger; the strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations; general economic conditions; legislative and regulatory changes; monetary and fiscal policies of the federal government; changes in tax policies, rates and regulations of federal, state and local tax authorities; changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of the Company's loan, investment and mortgage-backed securities portfolios; changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and fees; and the success of the Company at managing the risks involved in the foregoing.

The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company to reflect events or circumstances occurring after the date of this Form 10-Q.

For a complete discussion of the assumptions, risks and uncertainties related to our business, readers are encouraged to review the Company’s filings with the SEC, including the “Risk Factors” section in the Company’s Form 10-K, as supplemented by its quarterly or other reports subsequently filed with the SEC.

Market Overview. Although the economy slowly improved during calendar 2016 and in the first quarter calendar 2017, we still view the current environment as challenging. During 2017, the stock market has reached record highs, along with an increase in demand for commercial real estate. Since December 2015, the Federal Reserve Bank increased the discount rate 25 basis points on two occasions. The prime rate used by most banks was impacted by a similar increase during that time frame.

The Company continues to focus on the credit quality of its customers, closely monitoring the financial status of borrowers throughout the Company’s markets, gathering information, working on early detection of potential problems, taking pre-emptive steps where necessary and performing the analysis required to maintain adequate reserves for loan losses. 

Despite the current market and economic conditions, the Company continues to maintain capital well in excess of regulatory requirements.

The following discussion provides further details on the financial condition of the Company at March 31, 2017 and September 30, 2016, and the results of operations for the three and six months ended March 31, 2017 and 2016.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2017 AND SEPTEMBER 30, 2016

At March 31, 2017, the Company had total assets of $844.2 million, as compared to $559.5 million at September 30, 2016, an increase of $284.8 million or 50.9%. The substantial majority of the growth was attributed to the acquisition of Polonia Bancorp, and its wholly owned subsidiary, Polonia Bank, which was effective as of January 1, 2017. In addition to the acquisition, the Company experienced growth in the balance of loans receivable of $13.3 million or 3.9% when comparing it to the $344.9 million balance of net loans as of September 30, 2016. In addition, as a result of the Polonia Bancorp acquisition, the Company recorded $8.0 million of goodwill and intangible assets during the quarter ended March 31, 2017.

Total liabilities increased by $268.0 million to $713.5 million at March 31, 2017 from $445.5 million at September 30, 2016. As with the asset growth, the bulk of the liability growth was the result of the acquisition of Polonia Bancorp. Along with the acquisition, the Company experienced growth in deposits by $34.6 million or 8.9% when comparing it to the $389.2 million deposit balance as of September 30, 2016.

49 

Total stockholders’ equity increased by $16.8 million to $130.8 million at March 31, 2017 from $114.0 million at September 30, 2016. This increase was primarily due to the issuance of 1,274,197 shares of common stock to the stockholders of Polonia Bancorp as the stock portion of the merger consideration for the acquisition (the merger consideration consisted of 50% stock and 50% cash). Another item that impacted stockholders’ equity was the termination of the Bank’s employee stock ownership plan (“ESOP”) as of December 31, 2016. A portion of the shares of common stock held in the ESOP’s suspense account was used to satisfy the ESOP’s indebtedness due the Company that was incurred by the ESOP to purchase shares in connection with the Bank’s mutual holding company reorganization in 2005 and its second-step conversion in 2013. In addition, stockholders’ equity was affected by a $2.1 million decline in the fair value of the Company’s available-for-sale portfolio and the net loss for the first six months of fiscal 2017.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2017 AND 2016

Net income. The Company reported a net loss of $2.1 million, or ($0.27) per basic and diluted share, for the quarter ended March 31, 2017 as compared to net income of $548,000, or $0.08 and $0.07 per basic and diluted share, respectively, for the same quarter in fiscal 2016. The loss in the current period reflected the effects of a one-time $2.7 million expense charge related to the Polonia Bancorp acquisition completed on January 1, 2017 as well as a $1.9 million non-cash charge-off associated with a large lending relationship (further discussion below). For the six months ended March 31, 2017, the Company recognized a net loss of $1.4 million, or ($0.18) per basic and diluted share, as compared to net income of $961,000, or $0.13 and $0.12 per basic and diluted shares, respectively, for the same period in fiscal 2016.

Net interest income. For the three months ended March 31, 2017, net interest income increased to $5.3 million as compared to $3.5 million for the same period in fiscal 2016. The increase reflected a $2.3 million, or 52.8%, increase in interest income, partially offset by an increase of $523,000, or 61.0%, in interest paid on deposits and borrowings. For the six months ended March 31, 2017, net interest income increased to $8.9 million as compared to $6.8 million for the same period in fiscal 2016. The increase reflected a $2.8 million, or 32.7%, increase in interest income, partially offset by an increase of $580,000, or 35.2%, in interest paid on deposits and borrowings. The increase in interest income in both periods in 2017 was primarily due to the increase in the weighted average balance of earning assets primarily reflecting the addition of earning assets and costing liabilities acquired January 1, 2017 upon completion of the Polonia Bancorp acquisition.

For the three and six months ended March 31, 2017, the net interest margin was 2.76% and 2.73%, respectively, compared to 2.73% and 2.73% for the same periods in fiscal 2016, respectively. The margin improvement in the second quarter of fiscal 2017 reflected in large part the increase in the weighted average balances noted above as well, to a lesser degree, the increase in the weighted average yield on earning assets which reflected the effects of purchase accounting fair value adjustments on the assets acquired and liabilities assumed from Polonia Bancorp.

Average balances, net interest income, and yields earned and rates paid. The following table shows for the periods indicated the total dollar amount of interest earned from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities and the resulting costs, expressed both in dollars and rates, the interest rate spread and the net interest margin. Average yields and rates have been annualized. Tax-exempt income and yields have not been adjusted to a tax-equivalent basis. All average balances are based on monthly balances. Management does not believe that the monthly averages differ significantly from what the daily averages would be.

50 

	Three Months
	Ended March 31,
	2017								2016
	Average					Average			Average					Average
	Balance		Interest			Yield/Rate (1)			Balance		Interest			Yield/Rate (1)
	(Dollars in Thousands)
Interest-earning assets:
Investment securities	$	125,568	$	759			2.45	%	$	60,871	$	415			2.73	%
Mortgage-backed securities		109,393		806			2.99			120,971		777			2.58
Loans receivable(2)		511,022		5,090			4.04			322,133		3,166			3.94
Other interest-earning assets		31,836		16			0.20			7,290		8			0.44
Total interest-earning assets		777,819		6,671			3.48			511,265		4,366			3.43
Cash and non interest-bearing balances		3,194								1,912
Other non interest-earning assets		52,208								19,009
Total assets	$	833,221							$	532,186
Interest-bearing liabilities:
Savings accounts	$	106,950		12			0.04		$	72,333		22			0.12
Money market deposit and NOW accounts		153,524		93			0.24			94,716		46			0.19
Certificates of deposit		303,940		888			1.18			213,597		674			1.27
Total deposits		564,414		993			0.71			380,646		742			0.78
Advances from Federal Home Loan Bank		116,572		377			1.31			32,287		106			1.32
Advances from borrowers for taxes and insurance		2,508		2			0.32			1,998		1			0.20
Total interest-bearing liabilities		683,494		1,372			0.81			414,931		849			0.82
Non interest-bearing liabilities:
Non interest-bearing demand accounts		10,187								2,721
Other liabilities		7,610								427
Total liabilities		701,291								418,079
Stockholders' equity		131,930								114,107
Total liabilities and stockholders' equity	$	833,221							$	532,186
Net interest-earning assets	$	94,325							$	96,334
Net interest income; interest rate spread			$	5,299			2.67	%			$	3,517			2.52	%
Net interest margin(3)							2.76	%							2.73	%
Average interest-earning assets to average interest-bearing liabilities				113.80	%							123.22	%

51 

	Six Months
	Ended March 31,
	2017								2016
	Average					Average			Average					Average
	Balance		Interest			Yield/Rate (1)			Balance		Interest			Yield/Rate (1)
	(Dollars in Thousands)
Interest-earning assets:
Investment securities	$	97,487	$	1,320			2.72	%	$	64,973	$	855			2.62	%
Mortgage-backed securities		110,694		1,377			2.49			101,962		1,328			2.60
Loans receivable(2)		428,624		8,415			3.94			318,570		6,226			3.90
Other interest-earning assets		21,620		64			0.59			9,547		13			0.27
Total interest-earning assets		658,425		11,176			3.40			495,052		8,422			3.39
Cash and non interest-bearing balances		2,375								1,940
Other non interest-earning assets		32,926								19,420
Total assets	$	693,726							$	516,412
Interest-bearing liabilities:
Savings accounts	$	89,394		30			0.07		$	72,665		47			0.13
Money market deposit and NOW accounts		122,206		126			0.21			93,339		96			0.21
Certificates of deposit		262,450		1,529			1.17			203,440		1,350			1.32
Total deposits		474,050		1,685			0.71			369,444		1,493			0.81
Advances from Federal Home Loan Bank		83,413		542			1.30			23,306		154			1.32
Advances from borrowers for taxes and insurance		2,284		2			0.18			1,892		2			0.21
Total interest-bearing liabilities		559,747		2,229			0.80			394,642		1,649			0.83
Non interest-bearing liabilities:
Non interest-bearing demand accounts		6,913								2,689
Other liabilities		4,344								3,219
Total liabilities		571,004								400,550
Stockholders' equity		122,722								115,861
Total liabilities and stockholders' equity	$	693,726							$	516,411
Net interest-earning assets	$	98,678							$	100,410
Net interest income; interest rate spread			$	8,947			2.60	%			$	6,773			2.56	%
Net interest margin(3)							2.73	%							2.73	%
Average interest-earning assets to average interest-bearing liabilities				117.63	%							125.44	%

(1) Yields and rates for the three month periods are annualized.

(2) Includes non-accrual loans. Calculated net of unamortized deferred fees, undisbursed portion of loans-in-process and the allowance for loan losses.

(3) Equals net interest income divided by average interest-earning assets.

Provision for loan losses. The Company recorded a provision for loan losses in the amount of $2.4 million and $2.6 million for the three and six months ended March 31, 2017, respectively, primarily due a $1.9 million charge-off related to a project of a borrower who planned to develop 169 residential units. As discussed below, the Bank and the borrower are in litigation and no resolution of the situation has been arrived at as of the date hereof. In light of the litigation status and the status of construction of the project, the Company determined it was prudent to have all of the borrower’s collateral pledged for the borrowing relationship re-appraised, specifically evaluating the fair value collateral of the loans related to the project on a “liquidation value” basis and not on a “performing project value” basis that has been previously used. Based on the new appraisals and the uncertainty the development of the project will recommence in the near future, the Company recorded a $1.9 million non-cash charge-off. The remaining portion of the provision recorded was related to an increase in the outstanding loans balance. The loans acquired from Polonia Bancorp did not have any impact on the allowance for loan and lease losses, because they were transferred at their fair value.

52 

The Company’s largest lending relationship is a $12.1 million participation interest in loan secured by a 316 unit apartment complex located in New Jersey which is performing in accordance with its terms. The second largest lending relationship consists of nine loans aggregating $10.6 million, all of which were classified as non-performing due to concerns with projected cash flows available to fund the borrower’s future obligations. The primary project of the borrower is the 169 residential lot development referenced above. During the second quarter of fiscal 2017 the Company recorded a $1.9 million charge-off as a result of litigation between the Bank and the borrower. In light of the litigation status and the status of construction of the project, the Company determined it was prudent to have all of the borrower’s collateral pledged for the borrowing relationship re-appraised, specifically evaluating the fair value collateral of the loans related to the project on a “liquidation value” basis and not on a “performing project value” basis that has been previously used. Based on the new appraisals and the uncertainty the development of the project will recommence in the near future, the Company recorded a $1.9 million non-cash charge-off. The remaining portion of the provision recorded was related to an increase in the outstanding loans balance.

The allowance for loan losses totaled $3.9 million, or 0.74% of total loans and 23.7% of total non-performing loans at March 31, 2017 as compared to $3.3 million, or 0.94% of total loans and 20.6% of total non-performing loans at September 30, 2016. The Company believes that the allowance for loan losses at March 31, 2017 was sufficient to cover all inherent and known losses associated with the loan portfolio at such date.

The Company’s methodology for assessing the adequacy of the allowance establishes both specific and general pooled allocations of the allowance.  Loans are assigned ratings, either individually for larger credits or in homogeneous pools, based on an internally developed grading system.  The resulting determinations are reviewed and approved by senior management.

At March 31, 2017, the Company’s non-performing assets totaled $16.6 million or 2.0% of total assets as compared to $16.5 million or 2.8% of total assets at September 30, 2016. Non-performing assets at March 31, 2017 included five construction loans aggregating $8.7 million, 34 one-to-four family residential loans aggregating $4.5 million, one single-family residential investment property loan totaling $1.4 million and four commercial real estate loans aggregating $1.5 million. Non-performing assets also included at March 31, 2017 one real estate owned property consisting of a single-family residential property with a carrying value of $192,000. At March 31, 2017, the Company had ten loans aggregating $6.9 million that were classified as troubled debt restructurings (“TDRs”). Three of such loans aggregating $4.9 million were designated non-performing as of March 31, 2017; one of such loans in the amount of $1.4 million has continued to make payments in accordance with the restructured terms, but management still has concerns over the borrower’s ability to make future payments and thereby has not upgraded the loan to performing status. The remaining two TDRs classified non-accrual totaling $3.5 million are a part of one of the Bank’s largest borrowing relationships discussed above. The primary project of the borrower is the subject of litigation between the Bank and the borrower and as a result, the project is currently not proceeding. As a result, the Company charged-off a portion of the outstanding loan balance as discussed above. The remaining seven TDRs have performed in accordance with the terms of their revised agreements and have been placed on accruing status. As of March 31, 2017, the Company had reviewed $16.9 million of loans for possible impairment of which $11.5 million was deemed classified as substandard compared to $19.4 million reviewed for possible impairment and $14.6 million of which was classified substandard as of September 30, 2016.

At March 31, 2017, the Company had $1.4 million of loans delinquent 30-89 days as to interest and/or principal. Such amount consisted of 10 one-to-four family residential loans totaling $1.0 million, one commercial real estate loan in the amount of $260,000, one lease in the amount of $89,000 and on credit card in the amount of $6,000.

At March 31, 2017, we also had a total of ten loans aggregating $3.1 million that had been designated “special mention”. These loans consist of three one-to-four family residential loans totaling $1.7 million and six commercial real estate loans totaling $1.4 million. At September 30, 2016, we had a total of five loans aggregating $2.6 million designated as “special mention”, consisting of three one-to-four family residential loans totaling $1.7 million and two commercial real estate loans totaling $943,000.

53 

The following table shows the amounts of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due as to principal and/or interest and real estate owned) as of March 31, 2017 and September 30, 2016. At neither date did the Company have any accruing loans 90 days or more past due that were accruing.

	March 31, 2017			September 30, 2016
	(Dollars in Thousands)
Non-accruing loans:
One-to-four family residential	$	6,378		$	4,244
Commercial real estate		1,346			1,346
Construction and land development		8,695			10,288
Total non-accruing loans		16,419			15,878
Real estate owned, net:  (1)		192			581
Total non-performing assets	$	16,611		$	16,459
Total non-performing loans as a percentage of loans, net		3.15	%		4.56	%
Total non-performing loans as a percentage of total assets		1.94	%		2.84	%
Total non-performing assets as a percentage of total assets		1.97	%		2.94	%

(1) Real estate owned balances are shown net of related loss allowances and consist solely of real property.

Non-interest income. Non-interest income amounted to $518,000 and $876,000 for the three and six month periods ended March 31, 2017, compared to $209,000 and $483,000, respectively, for the comparable periods in fiscal 2016. The increase experienced in both of the 2017 periods was primarily attributable to the acquisition of Polonia Bancorp along with an increased return on bank owned life insurance (“BOLI”) as a result of an additional $10.0 million of BOLI purchased in the quarter ended December 31, 2016.

Non-interest expense. For the three and six month periods ended March 31, 2017, non-interest expense increased $4.0 million or 141.9% and $3.8 million or 66.6%, respectively, compared to the same periods in the prior fiscal year. The primary reasons for the increases for the three and six month periods ended March 31, 2017 were the one-time merger related charge of approximately $2.7 million, pre-tax, combined with additional operating expenses resulting from the Polonia Bancorp acquisition which added five additional branch offices to our branch network as well as additional personnel.

Income tax expense. For the three month period ended March 31, 2017, the Company recorded a tax benefit of $1.2 million, compared to a $307,000 tax expense for the same period in fiscal 2016. For the six month period ended March 31, 2017, the Company recorded income tax benefit of $801,000 as compared to tax expense of $528,000 for the same period in fiscal 2016. The Company’s tax obligation for both the three and six month periods in fiscal 2017 was greatly reduced due to the one-time expenses recorded during the three months ended March 31, 2017. Of the $2.7 million in merger-related expenses incurred in connection with the Polonia Bancorp acquisition, $1.9 million was deductible for tax purposes.

54 

LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity, represented by cash and cash equivalents, is a product of its operating, investing and financing activities. Our primary sources of funds are deposits, scheduled principal and interest payments on loans, loan prepayments and the maturity of loans, mortgage-backed securities and other investments, and other funds provided from operations. While scheduled payments from the amortization of loans and mortgage-backed securities and maturing investment securities are relatively predictable sources of funds, deposit flows and loan and securities prepayments can be greatly influenced by market rates of interest, economic conditions and competition. We also maintain excess funds in short-term, interest-earning assets that provide additional liquidity. At March 31, 2017, our cash and cash equivalents amounted to $13.1 million. In addition, our available-for-sale investment securities amounted to an aggregate of $190.1 million at such date.

We use our liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets, and to meet operating expenses. At March 31, 2017, the Company had $13.9 million in outstanding commitments to originate fixed loans, not including loans in process. The Company also had commitments under unused lines of credit of $7.2 million and letters of credit outstanding of $1.5 million at March 31, 2017. Certificates of deposit as of March 31, 2017 that are maturing in one year or less totaled $145.0 million. Based upon historical experience, we anticipate that a significant portion of the maturing certificates of deposit will be redeposited with us.

In addition to cash flows from loan and securities payments and prepayments as well as from sales of available for sale securities, we have significant borrowing capacity available to fund liquidity needs should the need arise. Our borrowings consist solely of advances from the Federal Home Loan Bank of Pittsburgh (“FHLB”), of which we are a member. Under terms of the collateral agreement with the FHLB, we pledge residential mortgage loans as well as our stock in the FHLB as collateral for such advances. At March 31, 2017, we had $106.1 million in outstanding FHLB advances and had the ability to obtain an additional $179.7 million in FHLB advances. Additional borrowing capacity with the FHLB could be obtained with the pledging of certain investment securities. The Bank has also obtained approval to borrow from the Federal Reserve Bank discount window.

We anticipate that we will continue to have sufficient funds and alternative funding sources to meet our current commitments.

55 

The following table summarizes the Company’s and Bank’s regulatory capital ratios as of March 31, 2017 and September 30, 2016 and compares them to current regulatory guidelines. The Company is not subject to capital ratios imposed by Basel III on bank holding companies because the Company is deemed to be a small bank holding company.

							To Be
							Well Capitalized
				Required for			Under Prompt
				Capital Adequacy			Corrective Action
	Actual Ratio			Purposes			Provisions
March 31, 2017:
Tier 1 capital (to average assets)
The Company		15.70	%		N/A			N/A
The Bank		14.30	%		4.0	%		5.0	%
Tier 1 common (to risk-weighted assets)
The Company		25.10	%		N/A			N/A
The Bank		22.85	%		5.1	% (a)		6.5	%
Tier 1 capital (to risk-weighted assets)
The Company		25.10	%		N/A			N/A
The Bank		22.85	%		6.6	% (a)		8.0	%
Total capital (to risk-weighted assets)
The Company		25.94	%		N/A			N/A
The Bank		23.69	%		8.6	% (a)		10.0	%
September 30, 2016:
Tier 1 capital (to average assets)
Company		20.41	%		N/A			N/A
Bank		18.15	%		4.0	%		5.0	%
Tier 1 common (to risk-weighted assets)
The Company		38.57	%		N/A			N/A
The Bank		34.36	%		4.5	%		6.5	%
Tier 1 capital (to risk-weighted assets)
Company		38.57	%		N/A			N/A
Bank		34.36	%		4.0	%		6.0	%
Total capital (to risk-weighted assets)
Company		39.70	%		N/A			N/A
Bank		35.49	%		8.0	%		10.0	%

(a) Includes intial phase-in of capital conservation buffer.

IMPACT OF INFLATION AND CHANGING PRICES

The financial statements, accompanying notes, and related financial data of the Company presented herein have been prepared in accordance with generally accepted accounting principles which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation.

Unlike most industrial companies, substantially all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution's performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the price of goods and services, since such prices are affected by inflation to a larger extent than interest rates. In the current interest rate environment, liquidity and the maturity structure of the Company's assets and liabilities are critical to the maintenance of acceptable performance levels.

56 

How We Manage Market Risk. Market risk is the risk of loss from adverse changes in market prices and rates. Our market risk arises primarily from interest rate risk which is inherent in our lending, investment and deposit gathering activities. To that end, management actively monitors and manages interest rate risk exposure. In addition to market risk, our primary risk is credit risk on our loan portfolio. We attempt to manage credit risk through our loan underwriting and oversight policies.

The principal objective of our interest rate risk management function is to evaluate the interest rate risk embedded in certain balance sheet accounts, determine the level of risk appropriate given our business strategy, operating environment, capital and liquidity requirements and performance objectives, and manage the risk consistent with approved guidelines. We seek to manage our exposure to risks from changes in interest rates while at the same time trying to improve our net interest spread. We monitor interest rate risk as such risk relates to our operating strategies. We have established an Asset/Liability Committee which is comprised of our Chief Operating Officer, Chief Financial Officer, Chief Lending Officer, Chief Credit Officer, Chief Risk Officer and Controller. The Asset/Liability Committee meets on a regular basis and is responsible for reviewing our asset/liability policies and interest rate risk position. Both the extent and direction of shifts in interest rates are uncertainties that could have a negative impact on future earnings.

In recent years, as a part of our asset/liability management strategy we primarily have reduced our investment in longer term fixed-rate callable agency bonds, increased our origination of hybrid adjustable-rate single-family residential mortgage loans and increased our portfolio of step-up callable agency bonds and agency issued collaterized mortgage-backed securities (“CMOs”) with short effective lives. In addition, we implemented two interest rate swaps to reduce our funding costs for a five-year period. However, notwithstanding the foregoing steps, we remain subject to a significant level of interest rate risk in a low interest rate environment due to the high proportion of our loan portfolio that consists of fixed-rate loans as well as our decision in prior periods to invest a significant amount of our assets in long-term, fixed-rate investment and mortgage-backed securities.

Gap Analysis. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive” and by monitoring a Company’s interest rate sensitivity “gap.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to affect adversely net interest income while a positive gap would tend to result in an increase in net interest income. Conversely, during a period of falling interest rates, a negative gap would tend to result in an increase in net interest income while a positive gap would tend to affect adversely net interest income.

The following table sets forth the amounts of our interest-earning assets and interest-bearing liabilities outstanding at March 31, 2017, which we expect, based upon certain assumptions, to reprice or mature in each of the future time periods shown (the “GAP Table”). Except as stated below, the amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at March 31, 2017, on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments within a three-month period and subsequent selected time intervals. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and anticipated prepayments of adjustable-rate loans and fixed-rate loans, and as a result of contractual rate adjustments on adjustable-rate loans. Annual prepayment rates for variable-rate and fixed-rate single-family and multi-family residential and commercial mortgage loans are assumed to range from 5.3% to 31.6%. The annual prepayment rate for mortgage-backed securities is assumed to range from 0.5% to 17.9%. For savings accounts, checking accounts and money markets, the decay rates vary on an annual basis over a ten year period.

57 

				More than			More than			More than
	3 Months			3 Months			1 Year			3 Years			More than			Total
	or Less			to 1 Year			to 3 Years			to 5 Years			5 Years			Amount
	(Dollars in Thousands)
Interest-earning assets(1):
Investment and mortgage-backed securities(2)	$	9,288		$	15,228		$	36,017		$	33,310		$	148,764		$	242,607
Loans receivable(3)		62,193			63,816			141,248			84,997			169,631			521,885
Other interest-earning assets(4)		16,170			498			-			1,355			-			18,023
Total interest-earning assets	$	87,651		$	79,542		$	177,265		$	119,662		$	318,395		$	782,515
Interest-bearing liabilities:
Savings accounts	$	1,813		$	5,614		$	9,296		$	8,946		$	81,666		$	107,335
Money market deposit and NOW accounts		5,062			15,185			25,109			20,314			76,200			141,870
Certificates of deposit		58,662			118,528			118,035			41,408			-			336,633
Advances from FHLB		7,896			25,042			38,875			34,244			-			106,057
Advances from borrowers for taxes and insurance		2,789			-			-			-			-			2,789
Total interest-bearing liabilities	$	76,222		$	164,369		$	191,315		$	104,912		$	157,866		$	694,684
Interest-earning assets less interest-bearing liabilities	$	11,429		($	84,827	)	($	14,050	)	$	14,750		$	160,529		$	87,831
Cumulative interest-rate sensitivity gap (5)	$	11,429		($	73,398	)	($	87,448	)	($	72,698	)	$	87,831
Cumulative interest-rate gap as a percentage of total assets at March 31, 2017		1.35	%		-8.69	%		-10.36	%		-8.61	%		10.40	%
Cumulative interest-earning assets as a percentage of cumulative interest-bearing liabilities at March 31, 2017		114.99	%		69.49	%		79.75	%		86.46	%		112.64	%

(1) Interest-earning assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments and contractual maturities.

(2) For purposes of the gap analysis, investment securities are reflected at amortized cost.

(3) For purposes of the gap analysis, loans receivable includes non-performing loans and is gross of the allowance for loan losses and unamortized deferred loan fees, but net of the undisbursed portion of loans-in-process.

(4) Includes FHLB stock.

(5) Cumulative interest-rate sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities.

58 

Certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as variable-rate loans, have features which restrict changes in interest rates both on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. Finally, the ability of many borrowers to service their variable-rate loans may be adversely affected in the event of an interest rate increase.

Net Portfolio Value Analysis. Our interest rate sensitivity also is monitored by management through the use of a model which generates estimates of the changes in our net portfolio value (“NPV”) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities and off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The “Sensitivity Measure” is the decline in the NPV ratio, in basis points, caused by a 2% increase or decrease in rates, whichever produces a larger decline. The following table sets forth our NPV as of March 31, 2017 and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.

Change in									NPV as % of Portfolio
Interest Rates	Net Portfolio Value								Value of Assets
In Basis Points
(Rate Shock)	Amount		$ Change			% Change			NPV Ratio			Change
	(Dollars in Thousands)
300	$	172,687	$	7,845			4.76	%		14.65	%		(4.87	)%
200		170,300		5,458			3.31	%		16.28	%		(3.24	)%
100		173,890		9,048			5.49	%		17.97	%		(1.55	)%
Static		164,842		-			-			19.52	%		-
(100)		145,343		(19,499	)		(11.83	)%		19.96	%		0.44	%
(200)		126,047		(38,795	)		(23.53	)%		19.26	%		(0.26	)%
(300)		108,714		(56,128	)		(34.05	)%		19.23	%		(0.29	)%

At September 30, 2016, the Company’s NPV was $129.7 million or 23.2% of the market value of assets. Following a 200 basis point increase in interest rates, the Company’s “post shock” NPV would be $102.1 million or 20.0% of the market value of assets.

As is the case with the GAP Table, certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in NPV requires the making of certain assumptions which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the models presented assume that the composition of our interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the NPV model provides an indication of interest rate risk exposure at a particular point in time, such model is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from actual results.

59 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At March 31, 2017, there had not been any material change to the market risk disclosure contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2016, set forth in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation –Exposure to Changes in Interest Rates.”

ITEM 4. CONTROLS AND PROCEDURES

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the end of period covered by this report, our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and regulations and are operating in an effective manner.

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

60 

PART II

Item 1. Legal Proceedings

As previously disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, on March 31, 2016, Island View Properties, Inc., trading as Island View Crossing II, LP, and Renato J. Gualtieri (collectively, the “Gualtieri Parties”) filed suit (the “Litigation”) in the Court of Common Pleas, Philadelphia, Pennsylvania (the “Court”), against the Bank seeking damages in an amount in excess of $27.0 million. The lawsuit asserts allegations related to a loan granted by the Bank to the Gualtieri Parties to develop a 169-unit townhouse and condominium project located in Bristol Borough in Bucks County, Pennsylvania (the “Project”).

In May 2016, the Bank filed a motion with the court seeking to dismiss the majority of claims asserted in the Litigation.  In August 2016, the Court dismissed a majority of the Gualtieri Parties’ claims. The Bank has also counterclaimed against the Gualtieri Parties for failure to satisfy the loans extended thereto and for failure to complete the Project. In February 2017, the Court stayed the Litigation pending possible resolution of the Litigation. No resolution was obtained and the stay has expired. Discovery commenced between the Bank and Gualtieri Parties. As the case is in its early stages, no prediction can be made as to the outcome thereof. However, the Bank believes that it has meritorious defenses to the remaining claims under the Litigation and it intends to vigorously defend the case. The Litigation is currently scheduled to proceed to trial in October 2017.

In the interim since commencement of the Litigation, the Bank has filed Complaints for Confession against the Gualtieri Parties based on the claimed defaults under the nine loans issued by the Bank. These actions have been stayed pending the resolution of the Litigation. The Bank has also filed foreclosure actions with regard to the commercial properties collateralizing the loans issued to the Gualtieri Parties.

As previously disclosed, two putative shareholder derivative and class action lawsuits, Parshall v. Eugene Andruczyk et al. (“Parshall Lawsuit”) and Baron v. Eugene Andruczyk et al., consolidated as Parshall v. Eugene Andruczyk et al., were filed in the Circuit Court for Montgomery County, Maryland (the “Maryland Court”) on July 21, 2016 and August 29, 2016, respectively (both lawsuits are collectively referred to as the “Lawsuit”). The Lawsuit named as defendants (the “Defendants”) the directors of Polonia Bancorp and Polonia Bancorp and the Parshall Lawsuit also named the Company as a defendant. The Lawsuit alleges a breach of fiduciary duty by the Polonia Bancorp directors and Polonia Bancorp by approving the Agreement and Plan of Merger by and between the Company and Polonia Bancorp dated as of June 2, 2016 (the “Merger Agreement”) pursuant to which Polonia Bancorp will merge with and into the Company (the “Merger”) for (i) inadequate merger consideration and (ii) the inclusion of preclusive deal protection measures in the Merger Agreement. The Parshall Lawsuit also alleges that the Company aided and abetted the alleged breaches of fiduciary duty. The relief sought includes preliminary and permanent injunction against the consummation of the Merger, rescission or rescissory damages if the Merger is completed, costs and attorney’s fees.

Although the Company believed the claims were without merit, to avoid a potential delay of the Merger, on October 6, 2016, the Company and Polonia reached an agreement with the plaintiffs in the Lawsuit (“Plaintiffs”) providing for a non-monetary settlement of the Lawsuit that required the Company and Polonia to issue certain disclosures and waive certain standstill provisions related to the Merger Agreement which they did. The terms of the settlement are set forth in a Memorandum of Understanding (the “MOU”).  The settlement is subject to Maryland Court approval.  The Plaintiffs sought attorneys’ fees and expenses in connection with the Lawsuit as set forth in the MOU. Subsequent to entry into the MOU, the parties reached an agreement to pay Plaintiffs’ counsel fees and expenses in the total amount of $325,000.  Polonia Bancorp’s insurer prior to the Merger advised the Company that it would cover approximately $260,000 of the $325,000 of fees and expenses to be paid to Plaintiffs’ counsel under the terms of the settlement.

The Merger was completed effective as of January 1, 2017.

On January 13, 2017, the Maryland Court entered an Order preliminarily approving the settlement.  As per the settlement and the Maryland Court’s Order, on January 26, 2017, Polonia Bancorp / Prudential, through a third-party administrator, mailed notice of the settlement to all record and beneficial holders of shares of common stock of Polonia Bancorp (excluding Defendants and members of the immediate families of the individual Defendants) who held such stock at any time during the period beginning on and including June 2, 2016 (the date of the Merger Agreement) through October 25, 2016 (the date the shareholders of Polonia Bancorp approved the Merger).

61 

Although it is expected the settlement will receive final approval of the Maryland Court, no assurances can be provided when or if the settlement will receive final approval. A settlement hearing was held on March 31, 2017.

The Bank, as the successor to Polonia Bank, has been cooperating with the Department of Housing and Urban Development (“HUD”) which has been reviewing Polonia Bank’s participation in the Federal Housing Administration (“FHA”) loan program. In 2015, Polonia Bank exited this line of business. As a result of the Bank’s cooperation, effective as of April 24, 2017, the Bank entered, without admitting liability, into a Settlement Agreement with HUD (the “HUD Settlement”) in order to avoid the expense of potential litigation. As part of the HUD Settlement, the Bank agreed to pay approximately $417,000 to HUD consisting of (i) $346,000 in civil money penalties for alleged failures to comply with applicable HUD/ FHA rules and (ii) $71,000 to cover losses on one loan for which HUD had paid an insurance claim. These amounts are within the amount that Polonia Bank had included in its reserves for this matter prior to the completion of its acquisition by the Bank. The Bank has also agreed to indemnify HUD for any losses related to an additional 30 loans which have not been the subject of mortgage insurance claims. This settlement did not have a material impact on the Company’s financial condition or results of operations.

In addition to the lawsuits noted above, the Company is involved in various other legal actions arising in the ordinary course of its business. All such actions in the aggregate involve amounts that are believed by management to be immaterial to the financial condition and results of operations of the Company.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended September 30, 2016, as such factors could materially affect the Company’s business, financial condition, or future results of operations. As of March 31, 2017, no material changes have occurred to the risk factors of the Company as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016. The risks described in the 2016 Annual Report on Form 10-K are not the only risks that the Company faces. Additional risks and uncertainties not currently known to the Company, or that the Company currently deems to be immaterial, also may have a material adverse impact on the Company’s business, financial conditions, or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) and (b) Not applicable

(c) The Company currently has a board approved stock repurchase plan in operation but did not have repurchases of equity shares for the quarter ended March 31, 2017 pursuant to the plan, due to the current market conditions. The Company’s common stock is publicly trading at levels in excess of the limitation set forth in the Board approved plan.

62 

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Number of Shares that May Yet Purchased Under Plans or Programs (1)
January 1 - 31, 2017		303,756	$	17.13		-		188,159
February 1 - 28, 2017		42,791	$	17.56		-		188,159
March 1 - 31, 2017		-	$	-		-		188,159
		346,550	$	17.18

(1) On July 15, 2015, the Company announced that the Board of Directors had approved a second stock repurchase program authorizing the Company to repurchase up 850,000 shares of common stock, approximately 10% of the Company's then outstanding shares.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibit No.	Description
10.1	Retirement and Consulting Agreement by and between Prudential Bancorp, Inc., Prudential Bank and Jerome R. Balka dated as of March 1, 2017.*
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

63 

32.0	Section 1350 Certifications
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document.
	*Management contract or compensatory plan or arrangement required to be filed as an exhibit to the quarterly report on Form 10-Q.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PRUDENTIAL BANCORP, INC.

Date:	May 10, 2017	By:	/s/ Dennis Pollack
			Dennis Pollack
			President and Chief Executive Officer
Date:	May 10, 2017	By:	/s/ Jack E. Rothkopf
			Jack E. Rothkopf
			Senior Vice President, Chief Financial Officer and Treasurer

64 

EX-10.1

Exhibit 10.1

EXECUTION COPY

PRUDENTIAL BANCORP, INC.

PRUDENTIAL BANK

RETIREMENT AND CONSULTING AGREEMENT

This Retirement and Consulting Agreement (the “Agreement”) is entered into as of March 1, 2017 by and between, on the one hand, Prudential Bancorp, Inc. (the “Company”) and Prudential Bank (the “Bank” and collectively with the Company, “Prudential”), and, on the other hand, Jerome R. Balka.

WHEREAS, Mr. Balka currently serves as a member of the Boards of each of the Company and the Bank;

WHEREAS, Mr. Balka has provided valuable services to the Bank as a director for more than fifteen years and to the Company as a director since its formation in 2013 (and to its predecessor from its formation in 2004);

WHEREAS, Mr. Balka has provided legal services to the Bank for several decades, including serving as the Bank’s general counsel;

WHEREAS, Mr. Balka desires to retire as a member of the Board of Directors of each of the Company and the Bank; and

WHEREAS, the Bank desires to have Mr. Balka undertake, and Mr. Balka is willing to undertake, certain consulting obligations on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.            Effective Date. The “Effective Date” of the Agreement is March 1, 2017.

2.            Service on the Boards; Retirement; Consulting Period.

(a)          Effective as of March 1, 2017 (“Retirement Date”), Mr. Balka will retire from his position as a member of the Board of Directors of each of the Company and the Bank, as well as any positions he may have with the subsidiaries or affiliates of each entity.

(b)          Mr. Balka is hereby appointed, effective as of the Retirement Date, as a director emeritus of the Bank to serve in that capacity, which Mr. Balka accepts, through February 28, 2019 (the “Service Period”). Mr. Balka will be serving in his individual capacity and not on behalf of Reger Rizzo & Darnall LLP (“RRD”) of which firm he is a partner as of the date hereof.

(c)          Effective as of the Retirement Date, the Bank engages Mr. Balka, and Mr. Balka accepts such engagement to provide Consulting Services (as hereinafter defined) to the Bank, subject to the terms and conditions of this Agreement, for the period commencing on the

1

Retirement Date and ending on the eighteenth month anniversary of the Retirement Date, subject to its earlier termination in accordance with the terms hereof (the “Consulting Period”).

3.            Consulting Services.

(a)          Duties. During the Consulting Period, Mr. Balka shall provide his personal advice and counsel to the Bank in connection with its business and shall provide the following services (collectively, the “Consulting Services”):

(i) provide assistance, as requested, with respect to any loan relationships of the Bank for which Mr. Balka served as counsel to the Bank or acted upon in his capacity as a director thereof;

(ii) provide assistance with respect to the ongoing litigation, Island View Properties, Inc., trading as Island View Crossing II, LP, and Renato J. Gualtieri v. Prudential Savings Bank and any and all related litigation, including but not limited to Lava Funding, LLC v. Prudential Savings Bank, Renato Gualtieri and Island View Crossing II, L.P. and any other litigation that may arise out of such lending relationship (the “Litigation”);

(iii) participate in meetings or teleconferences with the Chairman, the President and Chief Executive Officer and other members of senior management of the Bank as may be reasonably requested from time to time; and

(iv) provide advice and assistance to the directors and senior management of the Bank with respect to such other matters related to the business of the Bank as may be reasonably requested from time to time by the directors and senior management of the Bank, including but not limited to assistance with matters that may arise in connection with the Bank’s lending activities, including the Litigation, or other litigation pending during the Consulting Period.

(b)          Reporting Responsibilities. Mr. Balka shall report directly to, and his activities shall be overseen by, the Chairman of the Board of Directors of the Bank, the President and Chief Executive Officer of the Bank and the Executive Vice President and Chief Operating Officer of the Bank.

(c)          Location of Services. The Consulting Services may be provided telephonically or electronically as the Chairman of the Board, the President and Chief Executive Officer or their designees and Mr. Balka may agree. In addition, with the prior approval of the Chairman or the President and Chief Executive Officer or their designees, Mr. Balka may provide the Consulting Services at the main office of the Company and the Bank or at such other locations within the market areas of the Company and the Bank as may be reasonably designated from time to time by the Chairman of the Board, the President and Chief Executive Officer or their designees. During the term of this Agreement, the Chairman of the Board, the President and Chief Executive Officer or their designees may request that Mr. Balka meet with them or other representatives of the Bank and with representatives of the loan relationships for which Mr. Balka served as counsel to the Bank or the Bank’s counsel in connection with the Litigation.

2

(d)          Access to Bank Records. Mr. Balka will only have access to Bank and Company records with the prior express permission of the Chairman of the Board or the President and Chief Executive Officer or their designees.

(e)          Role. Notwithstanding anything to the contrary herein, Mr. Balka is not being engaged to provide legal advice to the Bank as a part of the Consulting Services being provided thereby pursuant to the terms hereof.

4.            Compensation; Benefits.

(a)          Compensation – Director Emeritus. Mr. Balka shall not be entitled to any cash compensation for his service as a director emeritus during the Service Period.

(b)          Compensation-Consulting Services. In consideration of the obligations and commitments of Mr. Balka under this Agreement, including but not limited to Sections 2(c) and 3 regarding the Consulting Services, the covenants in Section 8, and the release provided by Mr. Balka in Section 12 hereof, the Bank agrees to pay to Mr. Balka $3,000 per month on the first business day of each month during the Consulting Period, commencing March 1, 2017 (the “Monthly Fee”), with the first payment of the Monthly Fee under this Agreement to be paid upon the later of (i) within five business days subsequent to the expiration of Revocation Period (as defined in Section 12(f) hereof), provided that Mr. Balka does not revoke this Agreement during the Revocation Period, or (ii) March 15, 2017. During the Consulting Period, Mr. Balka shall be treated as an independent contractor and shall not be deemed to be an employee of the Bank or any affiliate or subsidiary of the Bank, including the Company.

(c)          Existing Stock Options and Restricted Stock Awards. The 28,690 vested stock options held by Mr. Balka as of the Effective Date of this Agreement to purchase shares of common stock of the Company shall remain outstanding and exercisable in accordance with their terms. The options covering 18,000 shares of common stock of the Company and the restricted stock awards covering 6,000 shares which remain unvested as of the Effective Date will continue to vest in accordance with the terms of their grant so long as Mr. Balka continues to serve as a director emeritus of the Bank.

(d)          Expenses. The Company and/or the Bank shall reimburse Mr. Balka or otherwise provide for or pay for all reasonable expenses, if any, incurred by Mr. Balka at the specific request of the Company or the Bank, subject to such reasonable documentation as may be requested by the Company or the Bank. If such expenses are paid in the first instance by Mr. Balka, the Company and/or the Bank shall reimburse Mr. Balka therefor upon receipt of such reasonable documentation as may be requested by the Company. Such reimbursements or payments shall be made promptly by the Company or the Bank, as applicable, within 60 days of submission of the necessary documentation by Mr. Balka, absent extenuating circumstances, and, in any event, no later than March 15^th of the year immediately following the year in which such expenses were incurred.

3

5.            Termination.

(a)          Death or Disability. Mr. Balka’s Consulting Services and his service as a director emeritus shall terminate automatically upon his death during the Consulting Period. If the Bank determines in good faith that Mr. Balka has incurred a Disability during the Consulting Period (pursuant to the definition of Disability set forth below), it may give to Mr. Balka written notice in accordance with Section 16 of this Agreement of its intention to terminate Mr. Balka’s Consulting Services. In such event, Mr. Balka’s Consulting Services with the Bank shall terminate effective on the 60th day after receipt of such notice by Mr. Balka (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Mr. Balka shall not have returned to performance of his consulting duties. For purposes of this Agreement, “Disability” shall mean Mr. Balka is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as determined by a physician jointly selected by the Bank and Mr. Balka or Mr. Balka’s legal representative.

(b)          Cause. Prudential may terminate Mr. Balka’s service as a director emeritus or as a consultant during the Service Period and/or Consulting Period, as applicable, for Cause. For purposes of this Agreement, “Cause” shall mean removal of Mr. Balka as a director emeritus and/or as a consultant because of personal dishonesty, incompetence, misconduct, breach of fiduciary duty involving personal profit, failure to perform stated duties, violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, conduct which Prudential deems materially detrimental (monetarily or otherwise) to the Company and/or the Bank, the issuance of any removal and prohibition order by any regulatory authority or material breach of any provision of this Agreement. Notwithstanding anything in this Section 5(b) to the contrary, for purposes hereof, a determination by regulatory authorities that Mr. Balka has violated any applicable law, rule or regulation or final cease-and-desist order shall constitute Cause.

(c)          Notice of Termination. Any termination by the Company and/or the Bank pursuant to the terms hereof shall be communicated by a written Notice of Termination to the other party hereto given in accordance with Section 16 of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for removal of Mr. Balka as a director emeritus and/or a consultant under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice). The failure by the Company and/or the Bank to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company and/or the Bank hereunder or preclude the Company and/or the Bank, respectively, from asserting such fact or circumstance in enforcing the Company’s or the Bank’s rights hereunder.

(d)          Date of Termination. “Date of Termination” means if Mr. Balka’s service as a director emeritus and/or a consultant is terminated by the Company and/or the Bank for Cause, the date on which the Notice of Termination is given, and with respect to a termination for any reason other than Cause, the date specified in the Notice and Termination, which shall be not later than thirty (30) days following delivery of such notice.

4

6.            Obligations of the Bank upon Termination of Consulting Services or Service as Director Emeritus.

(a)          Death. If Mr. Balka’s services are terminated by reason of Mr. Balka’s death during the Consulting Period, the Bank shall pay to Mr. Balka’s estate or beneficiary, as applicable, in a lump sum in cash within 15 days following the Date of Termination the amount of (i) any earned but unpaid Monthly Fee of Mr. Balka through the Date of Termination plus (ii) any unpaid reimbursable expenses provided for under Section 4(d) which were incurred on a before the Date of Termination (the “Accrued Obligation”).

(b)          Disability. If Mr. Balka’s services are terminated by reason of his Disability during the Consulting Period, the Bank shall pay to Mr. Balka in a lump sum in cash within 15 days following the Date of Termination the amount of any Accrued Obligation.

(d)          Cause. If Mr. Balka’s services as a director emeritus or as a consultant are terminated for Cause during the Service Period and/or the Consulting Period, this Agreement shall terminate without further obligations pursuant to this Agreement to Mr. Balka other than for payment of the Accrued Obligation. The Accrued Obligation shall be paid to Mr. Balka in a lump sum in cash within 15 days following the Date of Termination. Mr. Balka’s equity awards shall be governed by the terms of the respective plans pursuant to which they were issued.

7.            Full Settlement. Except as provided in Section 8(c) of this Agreement, the obligation of the Bank to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Bank and/or the Company may have against Mr. Balka or others.

8.            Covenants.

(a)          Mr. Balka and Prudential agree that they shall not make or cause to be made, to any third party, any disparaging or critical remarks, comments or statements about or against the other and, in the case of the Company, its subsidiaries (including the Bank) and affiliates or any director, officer, employee or customer of any such entities at any time in the future, except for any statements by them made pursuant to lawful subpoena or legal process. Prudential shall advise the members of the Boards of Directors and all executive officers of the Bank and the Company (collectively, the “Persons to be Advised”) that they should not make public statements to third parties that are in any way disparaging or negative towards Mr. Balka. Prudential shall advise the Persons to be Advised that a non-disparagement agreement is in effect, and will use reasonable efforts to enforce compliance with this Agreement. The parties further agree that neither Mr. Balka nor Prudential will be liable for statements to Prudential’s independent auditors, state and federal banking regulators, the Securities and Exchange Commission (the “SEC”) or statements necessary to comply with applicable law or regulation. In addition, nothing contained herein shall prevent any of the parties hereto from making any truthful statement in connection with any legal proceeding or investigation by Prudential or any governmental authority.

5

(b)          Except as required by law or regulation (including without limitation in connection with any judicial or administrative process or proceeding), Mr. Balka shall keep secret and confidential and shall not disclose to any third party (other than the Bank or any of its subsidiaries or affiliates or any persons employed or engaged by such entities) in any fashion or for any purpose whatsoever any information regarding the Bank or any of its subsidiaries or affiliates which is not available to the general public to which Mr. Balka was granted access at any time prior to the Effective Date or during the Service Period and/or Consulting Period, including, without limitation, any of the following information relating to the Bank or any Bank subsidiary or affiliate: business or operations; plans, strategies, prospects or objectives; products, technology, processes or specifications; research and development operations or plans; the names and addresses of customers or prospective customers, including any customer lists; work performed or services rendered for any customer; any method and/or procedures relating to projects or other work developed for the Bank or any subsidiary or affiliate; distribution, sales, service, support and marketing practices and operations; financial condition, results of operations and prospects; operational strengths and weaknesses; and personnel and compensation policies and procedures. Notwithstanding anything to the contrary herein, Mr. Balka understands that nothing contained in this Agreement limits his ability to report information to or file a charge or complaint with the Equal Employment Opportunity Commission, the SEC, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System or any other federal, state or local governmental agency or commission (“Government Agencies”). Mr. Balka further understands that this Agreement does not limit his ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company and/or the Bank. This Agreement does not limit Mr. Balka’s right to receive an award for information provided to any Government Agencies.

(c)          Mr. Balka agrees that damages at law will be an insufficient remedy to Prudential in the event that Mr. Balka violates any of the provisions of subsections (a) or (b) of this Section 8, and that Prudential may apply for and, upon the requisite showing, have injunctive relief in any court of competent jurisdiction to restrain the breach or threatened or attempted breach of or otherwise to specifically enforce any of the covenants contained in subsections (a) or (b) of this Section 8. Mr. Balka hereby consents to the right of Prudential to seek (i) any injunction (temporary or otherwise) and (ii) any other court order which may be issued against Mr. Balka from violating, or directing Mr. Balka to comply with, any of the covenants in subsections (a) or (b) of this Section 8. Mr. Balka also agrees that such remedies that may be obtained shall be in addition to any and all remedies, including damages, available to Prudential against Mr. Balka for such breaches or threatened or attempted breaches.

(d)          In addition to the rights of the Company and the Bank set forth in subsection (c) of this Section 8, in the event that Mr. Balka violates the terms and conditions of subsections (a) or (b) of this Section 8, the Company and its subsidiaries and affiliates may terminate any payments or benefits of any type and regardless of source payable by the Company or its subsidiaries or affiliates, if applicable, to Mr. Balka, other than with respect to payments or benefits to Mr. Balka under plans or arrangements, if any, that are covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

6

(e)          Promptly upon the expiration of the 90 day period after the date Mr. Balka is no longer considered an affiliate of Prudential for purposes of the Securities Act of 1933, as amended, Prudential will use its commercially reasonable efforts to assist Mr. Balka in a request to the Company’s transfer agent and registrar to remove any restrictive legends deemed to no longer be applicable to Mr. Balka. Any expenses incurred by Prudential specifically in connection with Mr. Balka’s request will be reimbursed by Mr. Balka within five days of invoicing thereby by Prudential.

9.            Designation of Beneficiary. Mr. Balka may from time to time, by providing a written notification to the Bank and/or the Company, designate any person or persons (who may be designated concurrently, contingently or successively), his estate or any trust or trusts created by him to receive benefits which are provided under the terms of this Agreement. Each beneficiary designation shall revoke all prior designations and will be effective only when filed in writing with the Compensation Committees of the Boards of Directors of the Company and the Bank. If Mr. Balka fails to designate a beneficiary or if a beneficiary dies before the date of Mr. Balka’s death and no contingent beneficiary has been designated, then the benefits which are payable as aforesaid shall be paid to his estate. If benefits commence to be paid to a beneficiary and such beneficiary dies before all benefits to which such beneficiary is entitled have been paid, the remaining benefits shall be paid to the successive beneficiary or beneficiaries designated by Mr. Balka, if any, and if none to the estate of such beneficiary.

10.          Resolution of Disputes. Any dispute or controversy arising under or in connection with this Agreement shall be filed and maintained in the Philadelphia Court of Common Pleas or, if there is a basis for federal jurisdiction, in the United States District Court for the Eastern District of Pennsylvania. Each party hereto waives to the fullest extent permitted by applicable law and regulation any right it may have to a trial by jury with respect to any action or proceeding directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated by this Agreement.

11.          Unsecured Promise. Nothing contained in this Agreement shall create or require the Company or the Bank to create a trust of any kind to fund the benefits provided hereunder. Any insurance policy or other asset acquired or held by, or on behalf of, the Bank or funds allocated by the Bank or the Company in connection with the liabilities assumed by the Bank or the Company pursuant to this Agreement shall not be deemed to be held under any trust for the benefit of Mr. Balka or his beneficiaries or to be a security for the performance of the obligations of the Bank pursuant hereto but shall be and remain a general asset of the Bank. To the extent that Mr. Balka or any other person acquires a right to receive payments from the Bank or the Company hereunder, such right shall be no greater than the right of any unsecured general creditor of the Bank or the Company, as applicable.

7

12.          Release of the Company and Related Parties.

(a)          In consideration of the payments and the benefits to be provided to Mr. Balka pursuant to this Agreement, the sufficiency of which is hereby acknowledged, Mr. Balka, with the intention of binding himself and his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company, the Bank and each of their subsidiaries and affiliates (the “Company Affiliated Group”), their present and former officers, directors, executives, agents, attorneys and employees, and the successors, predecessors and assigns of each of the foregoing (collectively, the “Company Released Parties”), of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money, accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected, which Mr. Balka, individually or as a member of a class, now has, owns or holds, or has at any time heretofore had, owned or held, against any Company Released Party in any capacity, including, without limitation, any and all claims (i) arising out of or in any way connected with Mr. Balka’s service to any member of the Company Affiliated Group (or the predecessors thereof) through and including the Effective Date in any capacity, or the termination of such service in any such capacity as of the Effective Date, (ii) for severance or vacation benefits, unpaid wages, salary or incentive payments, (iii) for breach of contract, wrongful discharge, impairment of economic opportunity, defamation, intentional infliction of emotional harm or other tort, (iv) for any violation of applicable state and local labor and employment laws (including, without limitation, the Pennsylvania Human Relations Act, the Pennsylvania Minimum Wage Act, the Pennsylvania Wage Payment and Collection Law and all other laws concerning unlawful and unfair labor and employment practices), and (v) for employment discrimination under any applicable federal, state or local statute, provision, order or regulation, and including, without limitation, any claim under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the Americans with Disabilities Act (“ADA”), ERISA, the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act, the Family and Medical Leave Act and any similar or analogous state statute, excepting only:

(A)         the rights of Mr. Balka as a shareholder of the Company, including his stock options and restricted stock awards as described in Section 4(c);

(B)         rights to indemnification Mr. Balka may have under (i) applicable corporate law, (ii) the articles of incorporation, charter or bylaws of any entities included in the Company Affiliated Group, (iii) any other agreement between Mr. Balka and a Company Released Party, or (iv) as an insured under any director’s and officer’s liability insurance policy now or previously in force;

(C)         claims for vested benefits under any health, disability, retirement, life insurance or other similar “employee benefit plan” (within the meaning of Section 3(3) of ERISA) of the Company Affiliated Group existing as of the Effective Date (the “Company Benefit Plans”); and

8

(D)         the rights of Mr. Balka under this Agreement.

(b)          Mr. Balka acknowledges and agrees that the release of claims set forth in this Section 12 is not to be construed in any way as an admission of any liability whatsoever by any Company Released Party, with any such liability being expressly denied.

(c)          The release of claims set forth in this Section 12 applies to any relief no matter how called, including, without limitation, wages, back pay, front pay, compensatory damages, liquidated damages, punitive damages, damages for pain or suffering, costs, and attorney’s fees and expenses.

(d)          Mr. Balka specifically acknowledges that his acceptance of the terms of the release of claims set forth in this Section 12 is, among other things, a specific waiver of his rights, claims and causes of action under Title VII, the ADEA, the ADA and any state or local law or regulation in respect of discrimination of any kind.

(e)          Mr. Balka covenants and agrees that neither he, nor any person or entity on his behalf, will file or cause or permit to be filed any civil action, suit, arbitration or legal proceeding seeking any type of personal relief, or share in any remedy against the Bank or any other Company Released Party, involving any matter which: (i) is the subject of this Agreement; (ii) arises from, or relates or refers in any way to, Mr. Balka’s service to the Company and/or the Bank, the termination of that service, or the action or inaction of any of the Company Released Parties through and including the Effective Date; or (iii) occurred at any time in the past up to and including the date of Mr. Balka’s execution of this Agreement, or involves any continuing effects of any actions or practices which may have arisen or occurred on or prior to his execution of this Agreement; provided, however, that nothing in this Agreement prevents Mr. Balka from (x) filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or a state fair employment practices agency, or (y) initiating an action to enforce the terms of this Agreement or pursue claims pursuant to subsections (A) thorough (D) of Section 12(a).

(f)           Mr. Balka shall have a period of 21 days to consider whether to execute this Agreement. To the extent Mr. Balka has executed this Agreement within less than 21 days after its delivery to him, Mr. Balka hereby acknowledges that his decision to execute this Agreement prior to the expiration of such 21-day period was entirely voluntary. If Mr. Balka accepts the terms hereof and executes this Agreement, he may thereafter, for a period of seven days following (and not including) the date of execution (the “Revocation Period”), revoke this Agreement. If Mr. Balka determines to revoke this Agreement prior to the expiration of the Revocation Period, he shall provide a written notice to the Bank and the Company in accordance with Section 16 prior to such expiration. If no such revocation occurs, this Agreement shall become irrevocable in its entirety, and binding and enforceable against Mr. Balka, on the day next following the day on which the foregoing Revocation Period has elapsed. Any revocation of this Agreement shall be deemed for all purposes a revocation of this Agreement in its entirety.

9

(g)          Mr. Balka acknowledges and agrees that he has not, with respect to any transaction or state of facts existing prior to the date hereof, filed any complaints, charges or lawsuits against any Company Released Party with any governmental agency, court or tribunal.

(h)          Mr. Balka acknowledges and agrees that he has been advised by the Company and the Bank to consult with independent legal counsel of his choosing in connection with his review of this Agreement prior to executing this Agreement, that he has done so or had the opportunity to do so, that he has read and had the terms of this Agreement explained to him, and that he has entered into this Agreement voluntarily and with full knowledge of its significance, meaning and binding effect. Mr. Balka acknowledges and agrees that neither the Company nor the Bank nor their agents or representatives has made any promises, statements or representations, either oral or written, to Mr. Balka or anyone else concerning the terms or effects of this Agreement other than those expressly contained herein.

(h)          In addition to any other remedy available to the Company or the Bank hereunder, in the event that, as a result of a challenge brought by Mr. Balka, the release of claims set forth in Section 12 becomes null and void or is otherwise determined not to be enforceable, then the obligation of the Bank and/or the Company to make any additional payments or to provide any additional benefits under this Agreement shall immediately cease to be of any force and effect, and Mr. Balka shall promptly return to the Bank and/or the Company any payments or benefits the provision of which by the Bank and/or the Company was conditioned on the enforceability of this Agreement.         

13.          Full Settlement. The obligations of the Company and/or the Bank to perform their respective obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company and/or the Bank may have against Mr. Balka or others. In no event shall Mr. Balka be obligated to seek other services or take any other action by way of mitigation of the amounts payable to him under any of the provisions of this Agreement.

14.          Representations and Warranties. Each party hereto represents and warrants to each other that they have carefully read this Agreement and consulted with respect thereto, to the extent deemed appropriate, with their respective counsel and that each of them fully understands the content of this Agreement and its legal effect. Each party hereto also represents and warrants that this Agreement is a legal, valid and binding obligation of such party which is enforceable against it in accordance with its terms.

15.          Successors and Assigns. This Agreement will inure to the benefit of and be binding upon Mr. Balka and his assigns and upon the Company and the Bank and any successor to the Company or the Bank by merger or consolidation or any other change in form or any other person or firm or corporation to which all or substantially all of the assets and business of the Company and the Bank may be sold or otherwise transferred. Any successor to the Company or the Bank by merger, consolidation or other change in form shall expressly in writing assume all obligations of the Company or the Bank hereunder as fully as if it had been originally made a party hereto, and this Agreement shall continue in effect following any change in control of the Company and/or the Bank. This Agreement may not be assigned by any party hereto without the written consent of the other parties hereto.

10

16.         Notices. Any communication to a party required or permitted under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party or parties, as applicable:

If to Mr. Balka:

Jerome R. Balka, Esq.

At the address last appearing on the

personnel records of the Bank

If to the Company and the Bank:

Prudential Bancorp, Inc.

Prudential Bank

Administrative Offices

3993 Huntingdon Pike

Suite 300

Huntingdon, Pennsylvania 19006

Attention: Corporate Secretary

17.          Withholding. The Company and/or the Bank may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

18.          Entire Agreement; Severability.

(a)          This Agreement incorporates the entire understanding between the parties relating to the subject matter hereof, recites the sole consideration for the promises exchanged and supersedes any prior agreements between the Company and/or the Bank and Mr. Balka with respect to the subject matter hereof except as otherwise specifically provided herein. In reaching this Agreement, no party has relied upon any representation or promise except those set forth herein.

(b)          Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. In all such cases, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement.

11

(c)          All covenants and agreements in this Agreement shall expire on and be terminated and extinguished at the Date of Termination, except for those covenants and agreements contained herein which by their terms apply in whole or in part after the Date of Termination, including but not limited to the obligations set forth in Section 8 hereof.

19.          Amendment; Waiver.

(a)          This Agreement may not be amended, supplemented or modified except by an instrument in writing signed by each party hereto; provided, however, that notwithstanding anything in this Agreement to the contrary, the Company and the Bank may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended.

(b)          Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition. A waiver of any provision of this Agreement must be made in writing, designated as a waiver and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

20.         Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

21.         Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania applicable to agreements made and entirely to be performed within such jurisdiction.

22.         Headings. The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section. Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

23.         Regulatory Provisions. Notwithstanding anything to the contrary contained in this Agreement, any payments to Mr. Balka by the Company and/or the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with, to the extent applicable, Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

[The next page is the signature page.]

12

THIS AGREEMENT PROVIDES FOR A WAIVER OF JURY TRIAL PROVISION WHICH AFFECTS YOUR LEGAL RIGHTS AND MAY BE ENFORCED BY THE PARTIES.

IN WITNESS WHEREOF, Mr. Balka has hereunto set his hand, and the Company and the Bank have caused this Agreement to be executed by their duly authorized representatives, all as of the day and year first written above.

/s/ Jerome R. Balka

Name: Jerome R. Balka

ATTEST:		PRUDENTIAL BANCORP, INC.
By:	/s/Sharon Slater	By:	/s/Bruce E. Miller
Name:	Sharon Slater	Name:	Bruce E. Miller
Title:	Corporate Secretary	Title:	Chairman of the Board

ATTEST:		PRUDENTIAL BANK
By:	/s/Sharon Slater	By:	/s/Bruce E. Miller
Name:	Sharon Slater	Name:	Bruce E. Miller
Title:	Corporate Secretary	Title:	Chairman of the Board

13

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, Dennis Pollack, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Prudential Bancorp, Inc. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting as defined by Exchange Act Rules 13a-15(f) and 15d – 15(f) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date:  May 10, 2017	/s/ Dennis Pollack
	Dennis Pollack
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, Jack E. Rothkopf, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Prudential Bancorp, Inc. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting as defined by Exchange Act Rules 13a-15(f) and 15d – 15 (f) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date:  May 10, 2017	/s/Jack E. Rothkopf
	Jack E. Rothkopf
	Senior Vice President, Chief Financial Officer and Treasurer

EX-32.0

EXHIBIT 32.0

SECTION 1350 CERTIFICATIONS

Each of the undersigned Chief Executive Officer and Chief Financial Officer of Prudential Bancorp, Inc. (the "Registrant") hereby certifies that the Registrant's Form 10-Q for the quarter ended March 31, 2017 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:  May 10, 2017	/s/ Dennis Pollack
	Name: Dennis Pollack
	Title: President and Chief Executive Officer

Date:  May  10, 2017	/s/ Jack E. Rothkopf
	Name: Jack E. Rothkopf
	Title: Senior Vice President, Chief Financial Officer and Treasurer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Prudential Bancorp, Inc. and will be retained by and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2017	Apr. 30, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	PRUDENTIAL BANCORP, INC.
Entity Central Index Key	0001578776
Trading Symbol	pbip
Current Fiscal Year End Date	--09-30
Entity Filer Category	Accelerated Filer
Entity Common Stock Shares Outstanding		9,007,996
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2

XML

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands		Mar. 31, 2017	Sep. 30, 2016
ASSETS
Cash and amounts due from depository institutions		$ 2,587	$ 1,965
Interest-bearing deposits		10,471	10,475
Total cash and cash equivalents		13,058	12,440
Certificates of deposit		1,853	1,853
Investment and mortgage-backed securities available for sale (amortized cost - March 31, 2017, $192,636; September 30, 2016, $137,222)		190,108	138,694
Investment and mortgage-backed securities held to maturity (fair value - March 31, 2017, $56,540; September 30, 2016, $40,700)		58,197	39,971
Loans receivable - net of allowance for loan losses (March 31, 2017, $3,896; September 30, 2016, $3,269)		521,885	344,948
Accrued interest receivable		2,626	1,928
Real estate owned		192	581
Federal Home Loan Bank stock - at cost		5,699	2,463
Office properties and equipment - net		8,219	1,344
Bank owned life insurance		27,709	13,055
Prepaid expenses and other assets		2,530	1,634
Goodwill		7,163
Intangible assets		785
Deferred tax assets-net		4,204	569
TOTAL ASSETS		844,228	559,480
Deposits:
Noninterest-bearing		9,272	3,804
Interest-bearing		585,838	385,397
Total deposits		595,110	389,201
Advances from Federal Home Loan Bank (short-term)		27,000	20,000
Advances from Federal Home Loan Bank (long-term)		79,057	30,638
Accrued interest payable		790	1,403
Advances from borrowers for taxes and insurance		2,789	1,748
Accounts payable and accrued expenses		8,716	2,488
Total liabilities		713,462	445,478
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
Common stock, $.01 par value, 40,000,000 shares authorized; 10,819,006 and 9,544,809 issued and 9,007,996 and 8,045,544 outstanding at March 31, 2017 and September 30, 2016, respectively		108	95
Additional paid-in capital		117,467	95,713
Unearned Employee Stock Ownership Plan (ESOP) shares			(4,550)
Treasury stock, at cost: 1,811,010 shares at March 31, 2017 and and 1,499,265 shares at September 30, 2016		(26,629)	(21,098)
Retained earnings		41,140	43,044
Accumulated other comprehensive (loss) income	[1]	(1,320)	798
Total stockholders' equity		130,766	114,002
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 844,228	$ 559,480

[1] All amounts are net of tax. Amounts in parentheses indicate debits.

XML

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Statement Of Financial Position [Abstract]
Investment and mortgage-backed securities available for sale, amortized cost (in dollars)	$ 192,636	$ 137,222
Investment and mortgage-backed securities held to maturity, fair value (in dollars)	56,540	40,700
Allowance for loan losses on loans receivable (in dollars)	$ 3,896	$ 3,269
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	10,819,006	9,544,809
Common stock, shares outstanding	9,007,996	8,045,544
Number of treasury share purchased	1,811,010	1,499,265

XML

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
INTEREST INCOME:
Interest on loans	$ 5,090	$ 3,166	$ 8,415	$ 6,226
Interest on mortgage-backed securities	806	683	1,377	1,195
Interest and dividends on investments	731	509	1,337	988
Interest on interest-bearing assets	44	8	47	13
Total interest income	6,671	4,366	11,176	8,422
INTEREST EXPENSE:
Interest on deposits	996	743	1,687	1,495
Interest on advances from Federal Home Loan Bank	376	106	542	154
Total interest expense	1,372	849	2,229	1,649
NET INTEREST INCOME	5,299	3,517	8,947	6,773
PROVISION FOR LOAN LOSSES	2,365	75	2,550	75
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	2,934	3,442	6,397	6,698
NON-INTEREST INCOME:
Fees and other service charges	169	110	293	229
Gain on sale of loans, net	5	1	44	2
Gain on the sale of OREO				58
Income from bank owned life insurance	171	84	277	168
Other	173	14	262	26
Total non-interest income	518	209	876	483
NON-INTEREST EXPENSE:
Salaries and employee benefits	2,140	1,670	3,709	3,387
Data processing	194	112	306	228
Professional services	469	241	788	520
Office occupancy	416	259	668	507
Director compensation	93	102	161	228
Deposit insurance premium	71	90	41	172
Advertising	29	21	66	38
Merger related costs	2,663		2,663
Intangible asset amortization	37		37
Other	651	301	1,044	612
Total non-interest expense	6,763	2,796	9,483	5,692
(LOSS) INCOME BEFORE INCOME TAXES	(3,311)	855	(2,210)	1,489
INCOME TAXES:
Current (benefit) expense	(642)	111	(172)	397
Deferred (benefit) expense	(529)	196	(629)	131
Total income tax (benefit) expense	(1,171)	307	(801)	528
NET (LOSS) INCOME	$ (2,140)	$ 548	$ (1,409)	$ 961
BASIC (LOSS) EARNINGS PER SHARE (in dollars per share)	$ (0.27)	$ 0.08	$ (0.18)	$ 0.13
DILUTED (LOSS) EARNINGS PER SHARE (in dollars per share)	(0.27)	0.07	(0.18)	0.12
DIVIDENDS PER SHARE (in dollars per share)	$ 0.03	$ 0.03	$ 0.06	$ 0.06

XML

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Statement Of Other Comprehensive Income [Abstract]
Net (loss) income	$ (2,140)	$ 548	$ (1,409)	$ 961
Unrealized holding (losses) gains on available-for-sale securities	(548)	2,344	(4,000)	1,160
Tax effect	186	(797)	1,360	(395)
Unrealized holding gain on interest rate swaps	59		784
Tax effect	(20)		(262)
Total other comprehensive income (loss)	(323)	1,547	(2,118)	765
Comprehensive (loss) income	$ (2,463)	$ 2,095	$ (3,527)	$ 1,726

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Unearned ESOP Shares	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
BALANCE at Sep. 30, 2015	$ 95	$ 95,286	$ (4,926)	$ (14,691)	$ 41,219	$ 18	$ 117,001
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income					961		961
Other comprehensive income (loss)						765	765
Dividends paid ($0.06 per share)					(452)		(452)
Purchase of treasury stock (43,435 shares and 430,636 shares for March 31, 2017 and 2016 respectively)				(6,705)			(6,705)
Treasury stock used for Recognition and Retention Plan (34,805 shares and 41,800 shares issued for March 31, 2017 and 2016 respectively)		(640)		640
Tax benefit from stock compensation plans		111					111
Stock option expense		219					219
Recognition and Retention Plan expense		160					160
ESOP shares committed to be released (8,879 shares and 17,758 shares for March 31, 2017 and 2016 respectively)		77	188				265
BALANCE at Mar. 31, 2016	95	95,213	(4,738)	(20,756)	41,728	783	112,325
BALANCE at Sep. 30, 2016	95	95,713	(4,550)	(21,098)	43,044	798	114,002
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income					(1,409)		(1,409)
Other comprehensive income (loss)						(2,118)	(2,118)
Dividends paid ($0.06 per share)					(495)		(495)
Issuance of common stock (1,274,197 shares)	13	21,814					21,827
Purchase of treasury stock (43,435 shares and 430,636 shares for March 31, 2017 and 2016 respectively)				(995)			(995)
Terminate ESOP Plan (303,115 shares)			4,456	(5,189)			(733)
Treasury stock used for Recognition and Retention Plan (34,805 shares and 41,800 shares issued for March 31, 2017 and 2016 respectively)		(653)		653
Tax benefit from stock compensation plans		127					127
Stock option expense		236					236
Recognition and Retention Plan expense		185					185
ESOP shares committed to be released (8,879 shares and 17,758 shares for March 31, 2017 and 2016 respectively)		45	$ 94				139
BALANCE at Mar. 31, 2017	$ 108	$ 117,467		$ (26,629)	$ 41,140	$ (1,320)	$ 130,766

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parentheticals) - $ / shares	6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement Of Stockholders Equity [Abstract]
Dividends paid (in dollars per share)	$ 0.06	$ 0.06
Issuance of common stock (in shares)	1,274,197
Purchase of treasury stock (in shares)	43,435	430,636
Terminate ESOP Plan (in shares)	303,115
Treasury stock used for Recognition and Retention Plan (in shares)	34,651	41,800
ESOP shares committed to be released	8,879	17,758

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
OPERATING ACTIVITIES:
Net (loss) income	$ (1,409)	$ 961
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	241	158
Net amortization of premiums/discounts	510	66
Provision for loan losses	2,550	75
Net amortization of deferred loan fees and costs	165	106
Share-based compensation expense for stock options and awards	139	379
Income from bank owned life insurance	(277)	(168)
Gain from sale of loans held for sale	(44)	(2)
Gain on sale of other real estate owned	(60)	(58)
Originations of loans held for sale	(2,434)	(450)
Proceeds from sale of loans held for sale	2,478	452
Compensation expense of ESOP	421	265
Deferred income tax (expense) benefit	(629)	131
Changes in assets and liabilities which used cash:
Accrued interest receivable	(698)	(109)
Prepaid expenses and other assets	4,281	(497)
Accrued interest payable	(613)	(748)
Accounts payable and accrued expenses	(2,686)	(383)
Net cash provided by operating activities	1,935	178
INVESTING ACTIVITIES:
Purchase of investment and mortgage-backed securities available for sale	(55,673)	(46,828)
Purchase of corporate bonds available for sale	(11,714)	(19,421)
Purchase of municipal bonds held to maturity	(18,847)
Loans originated	(104,878)	(29,146)
Principal collected on loans	85,384	19,416
Principal payments received on investment and mortgage-backed securities:
Held-to-maturity	578	21,913
Available-for-sale	11,504	1,546
Proceeds from the sale of Polonia Bancorp's investment portfolio acquired	42,164
Redemption of FHLB Stock	163
Purchase of FHLB stock		(1,482)
Proceeds from sale of real estate owned	449	927
Acquisition, net of cash	28,956
Purchase of BOLI	(10,000)
Purchases of equipment	(214)	(161)
Net cash used in investing activities	32,128	(53,236)
FINANCING ACTIVITIES:
Net decrease increase in demand deposits, NOW accounts, and savings accounts	(4,009)	(2,788)
Net increase in certificates of deposit	37,675	21,784
Proceeds from FHLB advances		38,000
Repayment of FHLB advances	(1,813)	(941)
Increase in advances from borrowers for taxes and insurance	1,041	107
Cash dividends paid	(495)	(452)
Release unallocated shares from ESOP Plan	4,550
Repayment of remaining principal balance of ESOP Loan	(733)
Purchase of treasury stock	(5,531)	(6,705)
Tax benefit related to stock compensation plans	127	111
Net cash provided by financing activities	30,812	49,116
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	618	(3,942)
CASH AND CASH EQUIVALENTS - Beginning of period	12,440	11,272
CASH AND CASH EQUIVALENTS - End of period	13,058	7,330
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid on deposits and advances from Federal Home Loan Bank	2,842	2,397
Income taxes paid	980	$ 350
Assets acquired:
Investment securities	42,164
Loans	160,157
Premises	6,902
Core deposit intangible	822
Other Assets	14,039
Total Assets	224,084
Liabilities assumed:
Deposits	172,243
Advances	57,232
Other liabilities	8,914
Total liabilities assumed	238,389
Net non-cash assets (liabilities) acquired	(14,305)
Cash acquired	$ 47,901

XML

SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

1. SIGNIFICANT ACCOUNTING POLICIES

Prudential Bancorp, Inc. (the “Company”) is a Pennsylvania corporation and the parent holding company for Prudential Bank (the “Bank”). The Company is a registered bank holding company.

The Bank is a community-oriented Pennsylvania-chartered savings bank headquartered in South Philadelphia. The banking office network currently consists of the headquarters and main office, administrative office, and 10 full-service branch offices. Nine of the branch offices are located in Philadelphia (Philadelphia County), one is in Drexel Hill, Delaware County, and one is in Huntingdon Valley, Montgomery County (both Pennsylvania counties). The Bank maintains ATMs at all 11 of the banking offices. The Bank also provides on-line and mobile banking services.

The Bank is subject to regulation by the Pennsylvania Department of Banking and Securities (the “Department”), as its chartering authority and primary regulator, and by the Federal Deposit Insurance Corporation (the “FDIC”), which insures the Bank’s deposits up to applicable limits. As a bank holding company, the Company is subject to the regulation of the Board of Governors of the Federal Reserve System.

On January 1, 2017, the Company completed its acquisition of Polonia Bancorp, Inc. (“Polonia Bancorp”) and Polonia Bank, Polonia’s wholly owned subsidiary. Polonia Bancorp and Polonia Bank were merged with and into the Company and the Bank, respectively.

Basis of presentation – The accompanying unaudited consolidated financial statements were prepared pursuant to the rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) for interim information and therefore do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the financial statements have been included. The results for the three and six months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2017, or any other period. These financial statements should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.

Use of Estimates in the Preparation of Financial Statements—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions in the Company’s consolidated financial statements are recorded in the allowance for loan losses, goodwill and intangible assets, deferred income taxes, other-than-temporary impairment, and the fair value measurement for financial instruments. Actual results could differ from those estimates.

Share-Based Compensation – The Company accounts for stock-based compensation issued to employees, and where appropriate, non-employees, at fair value. Under fair value provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award at such date and is recognized as expense over the appropriate vesting period using the straight-line method. The amount of stock-based compensation recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. Determining the fair value of stock-based awards at the date of grant requires judgment, including estimating the expected term of the stock options and the expected volatility of the Company’s stock. In addition, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates or different key assumptions were used, it could have a material effect on the Company’s consolidated financial statements.

Dividends with respect to non-vested share awards granted pursuant to the Company’s 2008 Recognition and Retention Plan (“2008 Plan”) and held in the Trust (the “Trust”) are held for the benefit of the recipients and are paid out proportionately by the Trust to the recipients of stock awards granted pursuant to the Plan as soon as practicable after the stock awards are earned. A recipient of a share award granted under the 2014 Stock Incentive Plan will not receive any dividends declared on the common stock subject to the award prior to the date the shares are earned.

Treasury Stock – Stock held in treasury by the Company is accounted for using the cost method, which treats stock held in treasury as a reduction to total stockholders’ equity. During the six month period ended March 31, 2017, the Company repurchased 303,115 shares of common stock of unallocated shares held in a suspense account by the Bank’s ESOP as collateral with value of $5.2 million in order to payoff the associated loans that were terminated as of December 31, 2016 in connection with the termination of the Bank’s ESOP. In addition, 42,791 shares of common stock were purchased in conjunction with the termination of the Polonia Bank ESOP as a result of the acquisition. The remaining shares purchased were related to the Company buying and selling shares for the benefit of the employee stock plans.

FHLB Stock– FHLB stock is classified as a restricted equity security because ownership is restricted and there is not an established market for its resale.  FHLB stock is carried at cost and is evaluated for impairment when certain conditions warrant further consideration. Management concluded that the FHLB stock was not impaired at March 31, 2017.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The ASU’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this ASU specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This ASU is effective, as a result of ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company expects to adopt the revenue recognition guidance on October 1, 2018 using the modified retrospective approach.  A significant amount of the Company’s revenues is derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance.  With respect to noninterest income, the Company is in its preliminary stages of identifying and evaluating the revenue streams and underlying revenue contracts within the scope of the guidance.  The Company is expecting to begin developing processes and procedures during fiscal 2018 to ensure it is fully compliant with these amendments. To date, the Company has not yet identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance; however, the Company’s implementation efforts are ongoing and such assessments may change prior to the October 1, 2018 implementation date.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). The amendments in this ASU require that an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The Company does not expect the adoption of this amendment will have a significant impact to its Consolidated Statements of Income.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. Among other things, this ASU (a) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (g) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (h) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities including not-for-profit entities and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt the amendments in this ASU earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.  A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical expedients it may elect at adoption, but does not anticipate the amendments will have a significant impact on the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the impact to the Company’s balance sheet is estimated to result in less than a 1 percent increase in assets and liabilities. The Company also anticipates additional disclosures to be provided at adoption.

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815). The amendments in this ASU apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a heading instrument under Topic 815. The standards in this ASU clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. For public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. An entity has an option to apply the amendments in this ASU on either a prospective basis or a modified retrospective basis. Early adoption is permitted, including adoption in an interim period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815). The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. The amendments in this ASU clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt host. An entity performing the assessment under the amendments in this ASU is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. For public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For entities other than public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606). The amendments in this ASU affect entities with transactions included within the scope of Topic 606, which includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. The amendments in this ASU do not change the core principle of the guidance in Topic 606; they simply clarify the implementation guidance on principal versus agent considerations. The amendments in this ASU are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The amendments in this ASU affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements of ASU 2014-09, ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606), which among other things clarifies the objective of the collectability criterion in Topic 606, as well as certain narrow aspects of Topic 606. The amendments in this ASU affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. This ASU is not expected to have a significant impact on the Company’s financial statements 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial asset not excluded from the scope that have the contractual right to receive cash. The underlying premise of the ASU is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. This ASU additionally addresses purchased assets and introduces the purchased financial asset with a more-than-insignificant amount of credit deterioration since origination (“PCD”). The accounting for these PCD assets is similar to the existing accounting guidance of FASB Accounting Standards Codification (“ASC”) 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, for purchased credit impaired (“PCI”) assets, except the subsequent improvements in estimated cash flows will be immediately recognized into income, similar to the immediate recognition of subsequent deteriorations in cash flows. Current guidance only allows for the prospective recognition of these cash flow improvements. Because the terminology has been changed to a “more-than-insignificant” amount of credit deterioration, the presumption is that more assets might qualify for this accounting under the Update than those under current guidance. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to the amount of retained earnings as of the beginning of the first reporting period in which the guidance is adopted. A prospective transition approach is required for debt securities. An entity that has previously applied the guidance of ASC 310-30 will prospectively apply the guidance in this Update for PCD assets. A prospective transition approach should be used for PCD assets where upon adoption, the amortized cost basis should be adjusted to reflect the addition of the allowance for credit losses. Upon adoption, the Company expects a change in the processes and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The new guidance may result in an increase in the allowance for loan losses which will also reflect the new requirement to include the non-accretable principal differences on PCI loans; however, the Company is still in the process of determining the magnitude of the increase and its impact on the Company’s financial position or results of operations. In addition, the current accounting policy and procedures for other-than-temporary impairment on investment securities available for sale will be replaced with an allowance approach. The Company is expecting to begin developing and implementing processes and procedures to ensure it is fully compliant with the amendments at the adoption date.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing diversity in practice. Among these include recognizing cash payments for debt prepayment or debt extinguishment as cash outflows for financing activities; cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage; and cash proceeds received from the settlement of bank-owned life insurance policies should be classified as cash inflows from investing activities while the cash payments for premiums on bank-owned policies may be classified as cash outflows for investing activities, operating activities, or a combination of investing and operating activities. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s statement of cash flows.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), which requires recognition of current and deferred income taxes resulting from an intra-entity transfer of any asset (excluding inventory) when the transfer occurs. Consequently, the amendments in this ASU eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those annual reporting periods. For all other entities, the amendments are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual periods beginning after December 15, 2019. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, earlier adoption should be in the first interim period if an entity issues interim financial statements. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to the amount of retained earnings as of the beginning of the period of adoption. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . This ASU, among others things, clarifies that guarantee fees (other than product or service warranties) within the scope of Topic 460, Guarantees, are not within the scope of Topic 606. The effective date and transition requirements for ASU 2016-20 are the same as the effective date and transition requirements for the new revenue recognition guidance. For public entities with a calendar year-end, the new guidance is effective in the quarter and year beginning January 1, 2018. For all other entities with a calendar year-end, the new guidance is effective in the year ending December 31, 2019, and interim periods in 2020. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, which provides a more robust framework to use in determining when a set of assets and activities (collectively referred to as a “set”) is a business. The screening process requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. Public business entities should apply the amendments in this ASU to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this ASU should be applied prospectively on or after the effective date. This ASU is not expected to have a significant impact on the Company’s financial statements.

In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323), Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. This Update adds an SEC paragraph to the Codification following an SEC Staff Announcement about applying Staff Accounting Bulletin (SAB) Topic 11.M. Specifically, this announcement applies to ASU 2014-09, Revenue from Contracts with Customers (Topic 606); ASU 2016-02, Leases (Topic 842); and ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. A registrant should evaluate Updates that have not yet been adopted to determine the appropriate financial statement disclosures about the potential material effects of those Updates on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact that adoption of the Updates referenced in this announcement are expected to have on the financial statements, then in addition to making a statement to that effect, that registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. In this regard, the SEC staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies that the registrant expects to apply, if determined, and a comparison to the registrant’s current accounting policies. Also, a registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The amendments in this Update are effective immediately.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is a U.S. Securities and Exchange Commission (“SEC”) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021.

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). The amendments in this Update clarify what constitutes a financial asset within the scope of Subtopic 610-20. The amendments also clarify that entities should identify each distinct nonfinancial asset or in substance nonfinancial asset that is promised to a counterparty and to derecognize each asset when the counterparty obtains control. There is also additional guidance provided for partial sales of a nonfinancial asset and when derecognition, and the related gain or loss, should be recognized. The amendments in this Update are effective at the same time as the amendments in Update 2014-09. Therefore, for public entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. For all other entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position on results of operation.

In February 2017, the FASB issued ASU 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965). This Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust, which is a trust for which a regulated financial institution serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. For each master trust in which a plan holds an interest, the amendments in this Update require a plan's interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. The amendments in this Update remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments, which supplements the existing requirement to disclose the master trusts balances in each general type of investments. There are also increased disclosure requirements for investments in master trusts. The amendments in this Update are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715). The amendments in this Update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20). The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

XML

EARNINGS PER SHARE

6 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

2. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, net of any treasury shares, during the period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, net of any treasury shares, after consideration of the potential dilutive effect of common stock equivalents, consisting of restricted stock and stock options based upon the treasury stock method using an average market price for the period.

The calculated basic and diluted earnings per share are as follows:

	Three Months Ended March 31,
	2017						2016
	Basic			Diluted			Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net (loss) income	$	(2,140	)	$	(2,140	)	$	548	$	548
Weighted average shares outstanding		8,639,908			8,639,908			7,380,880		7,380,880
Effect of common stock equivalents		-			-			-		270,973
Adjusted weighted average shares used in earnings per share computation		8,639,908			8,639,908			7,380,880		7,651,853
Earnings (loss) per share - basic and diluted	$	(0.27	)	$	(0.27	)	$	0.07	$	0.07
	Six Months Ended March 31,
	2017						2016
	Basic			Diluted			Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net (loss) income	$	(1,409	)	$	(1,409	)	$	961	$	961
Weighted average shares outstanding		7,979,541			7,979,541			7,498,933		7,498,933
Effect of common stock equivalents		-			-			-		246,791
Adjusted weighted average shares used in earnings per share computation		7,979,541			7,979,541			7,498,933		7,745,724
Earnings (loss) per share - basic and diluted	$	(0.18	)	$	(0.18	)	$	0.13	$	0.12

For the three and six month period ended March 31, 2017, respectively, 303,610 and 341,277, exercisable stock options outstanding were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive since the Company incurred a net loss in both periods. The stock options outstanding as of March 31, 2016 had exercise prices below the then current per share market price for the Company’s common stock and were considered dilutive for the earnings per share calculation.

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Mar. 31, 2017

Accumulated Other Comprehensive Income [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in accumulated other comprehensive (loss) income by component, net of tax:

	Three Months Ended March 31,
	2017			2016
	(Dollars in Thousands)
	Unrealized gains (losses)
	on available for sale			Unrealized gains (losses)
	securities and interest			on available for sale
	rate swaps (a)			securities (a)
Beginning Balance	$	(997	)	$	(764	)
Unrealized (loss) gains on available for sale securities		(362	)		1,547
Unrealized gains on interest rate swaps.		39			-
Total other comprehensive (loss) income		(323	)		1,547
Ending Balance	$	(1,320	)	$	783

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

The following table presents the changes in accumulated other comprehensive (loss) income by component, net of tax:

	Six Months Ended March 31,
	2017			2016
	(Dollars in Thousands)
	Unrealized gains (losses)
	on available for sale			Unrealized gains (losses)
	securities and interest			on available for sale
	rate swaps (a)			securities (a)
Beginning Balance	$	798		$	18
Unrealized (loss) gains on available for sale securities		(2,641	)		765
Unrealized gains on interest rate swaps.		523			-
Total other comprehensive income (loss)		(2,118	)		765
Ending Balance	$	(1,320	)	$	783

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

There was no reclassification adjustment to accumulated comprehensive income for the periods presented.

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES

6 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

INVESTMENT AND MORTGAGE-BACKED SECURITIES

4. INVESTMENT AND MORTGAGE-BACKED SECURITIES

The amortized cost and fair value of investment and mortgage-backed securities, with gross unrealized gains and losses, are as follows:

	March 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	20,988	$	-	$	(493	)	$	20,495
Mortgage-backed securities - U.S. government agencies		134,529		161		(1,898	)		132,792
Corporate bonds		37,093		82		(420	)		36,755
Total debt securities available for sale		192,610		243		(2,811	)		190,042
FHLMC preferred stock		26		40		-			66
Total securities available for sale	$	192,636	$	283	$	(2,811	)	$	190,108
Securities Held to Maturity:
U.S. government and agency obligations	$	29,500	$	122	$	(1,856	)	$	27,766
Mortgage-backed securities - U.S. government agencies		5,906		325		(37	)		6,194
Municipal bonds		22,791		150		(361	)		22,580
Total securities held to maturity	$	58,197	$	597	$	(2,254	)	$	56,540

	September 30, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	20,988	$	36	$	-		$	21,024
Mortgage-backed securities - U.S. government agencies		90,817		860		(102	)		91,575
Corporate bonds		25,411		661		(19	)		26,053
Total debt securities available for sale		137,216		1,557		(121	)		138,652
FHLMC preferred stock		6		36		-			42
Total securities available for sale	$	137,222	$	1,593	$	(121	)	$	138,694
Securities Held to Maturity:
U.S. government and agency obligations	$	33,499	$	399	$	(129	)	$	33,769
Mortgage-backed securities - U.S. government agencies		6,472		459		-			6,931
Total securities held to maturity	$	39,971	$	858	$	(129	)	$	40,700

The following table shows the gross unrealized losses and related fair values of the Company’s investment securities, aggregated by investment category and length of time that individual securities had been in a continuous loss position at March 31, 2017:

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(493	)	$	20,528	$	-		$	-	$	(493	)	$	20,528
Mortgage-backed securities - agency		(1,730	)		86,840		(168	)		7,251		(1,898	)		94,091
Corporate bonds		(420	)		22,498		-			-		(420	)		22,498
Total securities available for sale	$	(2,643	)	$	129,866	$	(168	)	$	7,251	$	(2,811	)	$	137,117
Securities Held to Maturity:
U.S. government and agency obligations	$	(1,856	)	$	32,499	$	-		$	-	$	(1,856	)	$	32,499
Mortgage-backed securities - agency		(37	)		1,267		-			-		(37	)		1,267
Municipal bonds		(361	)		17,044		-			-		(361	)		17,044
Total securities held to maturity	$	(2,254	)	$	50,810	$	-		$	-	$	(2,254	)	$	50,810
Total	$	(4,897	)	$	180,676	$	(168	)	$	7,251	$	(5,065	)	$	187,927

The following table shows the gross unrealized losses and related fair values of the Company’s investment securities, aggregated by investment category and length of time that individual securities had been in a continuous loss position at September 30, 2016:

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
Mortgage-backed securities - agency	$	(50	)	$	16,498	$	(52	)	$	6,718	$	(102	)	$	23,216
Corporate bonds		(19	)		3,955		-			-		(19	)		3,955
Total securities available for sale	$	(69	)	$	20,453	$	(52	)	$	6,718	$	(121	)	$	27,171
Securities Held to Maturity:
U.S. government and agency obligations	$	(129	)	$	20,371	$	-		$	-	$	(129	)	$	20,371
Total securities held to maturity	$	(129	)	$	20,371	$	-		$	-	$	(129	)	$	20,371
Total	$	(198	)	$	40,824	$	(52	)	$	6,718	$	(250	)	$	47,542

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least once each quarter, and more frequently when economic or market concerns warrant such evaluation. The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities.  Management also evaluates other facts and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, the length of time and extent to which the fair value of the security has been less than cost, and the near-term prospects of the issuer.

The Company assesses whether a credit loss exists with respect to a security by considering whether (1) the Company has the intent to sell the security, (2) it is more likely than not that it will be required to sell the security before recovery has occurred, or (3) it does not expect to recover the entire amortized cost basis of the security. The Company bifurcates the OTTI impact on impaired securities where impairment in value was deemed to be other than temporary between the component representing credit loss and the component representing loss related to other factors. The portion of the fair value decline attributable to credit loss must be recognized through a charge to earnings. The credit component is determined by comparing the present value of the cash flows expected to be collected, discounted at the rate in effect before recognizing any OTTI, with the amortized cost basis of the debt security.  The Company uses the cash flows expected to be realized from the security, which includes assumptions about interest rates, timing and severity of defaults, estimates of potential recoveries, the cash flow distribution from the security and other factors, then applies a discount rate equal to the effective yield of the security.  The difference between the present value of the expected cash flows and the amortized book value is considered a credit loss.  The fair value of the security is determined using the same expected cash flows; the discount rate is a rate the Company determines from open market and other sources as appropriate for the particular security.  The difference between the fair value and the security’s remaining amortized cost is recognized in other comprehensive income (loss).

For both the three and six months ended March 31, 2017 and 2016, the Company did not record any credit losses on investment securities through earnings.

U.S. Government and Agency Obligations - At March 31, 2017, there were 14 securities in a gross unrealized loss position for less than 12 months. These securities represent asset-backed issues that are issued or guaranteed by a U.S. Government sponsored agency or carry the full faith and credit of the United States through a government agency and are currently rated AAA by at least one bond credit rating agency. As a result, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2017.

Mortgage-Backed Securities – At March 31, 2017, there were 39 mortgage-backed securities in a gross unrealized loss position for less than 12 months, while there were six securities in a gross unrealized loss position for more than 12 months at such date. These securities represent asset-backed issues that are issued or guaranteed by a U.S. Government sponsored agency or carry the full faith and credit of the United States through a government agency and are currently rated AAA by at least one bond credit rating agency. As a result, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2017.

Corporate Bonds – At March 31, 2017, there were 16 securities in a gross unrealized loss for less than 12 months. These securities are backed by publicly traded companies with an investment grade rating by one or more of the three following rating agencies (S&P, Moody’s or Fitch). As a result, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2017.

Municipal Bonds – At March 31, 2017, there were nine securities in a gross unrealized loss for less than 12 months. These securities are backed by local municipalities/school districts located in the Commonwealth of Pennsylvania with an investment grade rating by one or more of the three following rating agencies (S&P, Moody’s or Fitch). As a result, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2017.

The amortized cost and fair value of debt securities, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The maturity table below excludes mortgage-backed securities because the contractual maturities of such securities are not indicative of actual maturities due to significant prepayments.

	March 31, 2017
	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in Thousands)
Due after one through five years	$	2,868	$	2,995	$	4,051	$	4,054
Due after five through ten years		20,603		20,228		33,042		32,702
Due after ten years		28,820		27,123		20,988		20,494
Total	$	52,291	$	50,346	$	58,081	$	57,250

During the both three and six month periods ended March 31, 2017 and 2016, the Company did not sell any securities.

During the both three and six month periods ended March 31, 2017 and 2016, the Company did not use investment securities as collateral for any of its FHLB advances.

XML

LOANS RECEIVABLE

6 Months Ended

Mar. 31, 2017

Receivables [Abstract]

LOANS RECEIVABLE

5. LOANS RECEIVABLE

Loans receivable consist of the following:

	March 31,			September 30,
	2017			2016
	(Dollars in Thousands)
One-to-four family residential	$	365,425		$	233,531
Multi-family residential		13,710			12,478
Commercial real estate		95,853			79,859
Construction and land development		86,164			21,839
Commercial business		-			99
Leases		5,491			3,286
Consumer		7,442			799
Total loans		574,085			351,891
Undisbursed portion of loans-in-process		(45,173	)		(5,371	)
Deferred loan fees and (costs)		(3,131	)		1,697
Allowance for loan losses		(3,896	)		(3,269	)
Net loans	$	521,885		$	344,948

The following table summarizes by loan segment the balance in the allowance for loan losses and the loans individually and collectively evaluated for impairment by loan segment at March 31, 2017:

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Leases		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,350		122		862		1,035		28		135		364		3,896
Total ending allowance balance	$	1,350	$	122	$	862	$	1,035	$	28	$	135	$	364	$	3,896
Loans:
Individually evaluated for impairment	$	5,031	$	330	$	2,881	$	8,703	$	-	$	-			$	16,945
Collectively evaluated for impairment		360,394		13,380		92,972		77,461		5,491		7,442				557,140
Total loans	$	365,425	$	13,710	$	95,853	$	86,164	$	5,491	$	7,442			$	574,085

The following table summarizes by loan segment the balance in the allowance for loan losses and the loans individually and collectively evaluated for impairment by loan segment at September 30, 2016:

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Commercial business		Leases		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,627		137		859		316		1		21		10		298		3,269
Total ending allowance balance	$	1,627	$	137	$	859	$	316	$	1	$	21	$	10	$	298	$	3,269
Loans:
Individually evaluated for impairment	$	5,553	$	335	$	3,154	$	10,288	$	99	$	-	$	-			$	19,429
Collectively evaluated for impairment		227,978		12,143		76,705		11,551		-		3,286		799				332,462
Total loans	$	233,531	$	12,478	$	79,859	$	21,839	$	99	$	3,286	$	799			$	351,891

The loan portfolio is segmented at a level that allows management to monitor both risk and performance. Management evaluates for potential impairment all construction, multi-family, commercial real estate, commercial business loans, and leases and all loans and leases more than 90 days delinquent as to principal and/or interest. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect in full the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.

Once the determination is made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is generally measured by comparing the recorded investment in the loan to the fair value of the loan using one of the following three methods: (a) the present value of the expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs. Management primarily utilizes the fair value of collateral method as a practically expedient alternative. On collateral method evaluations, any portion of the loan deemed uncollectible is charged-off against the loan loss allowance.

The following table presents impaired loans by class as of March 31, 2017, segregated by those for which a specific allowance was required and those for which a specific allowance was not required.

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	5,031	$	5,031	$	5,394
Multi-family residential		-		-		330		330		330
Commercial real estate		-		-		2,881		2,881		2,881
Construction and land development		-		-		8,703		8,703		10,522
Total loans	$	-	$	-	$	16,945	$	16,945	$	19,127

The following table presents impaired loans by class as of September 30, 2016, segregated by those for which a specific allowance was required and those for which a specific allowance was not required.

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	5,553	$	5,553	$	5,869
Multi-family		-		-		335		335		335
Commercial real estate		-		-		3,154		3,154		3,154
Construction and land development		-		-		10,288		10,288		10,288
Commercial loans		-		-		99		99		99
Total loans	$	-	$	-	$	19,429	$	19,429	$	19,745

The following tables present the average recorded investment in impaired loans and related interest income recognized for the periods indicated:

	Three Months Ended March 31, 2017
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	6,086	$	32	$	33
Multi-family residential		330		6		-
Commercial real estate		2,801		17		-
Construction and land development		9,607		-		-
Total loans	$	18,824	$	55	$	33
	Three Months Ended March 31, 2016
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	5,069	$	20	$	29
Multi-family residential		345		-		-
Commercial real estate		3,703		27		-
Construction and land development		9,410		126		-
Total loans	$	18,527	$	173	$	29
	Six Months Ended March 31, 2017
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	5,909	$	49	$	58
Multi-family residential		332		12		-
Commercial real estate		2,919		35		12
Construction and land development		9,834		-		-
Total loans	$	18,994	$	96	$	70

	Six Months Ended March 31, 2016
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	4,781	$	43	$	59
Multi-family residential		348		-		-
Commercial real estate		3,725		42		12
Construction and land development		9,206		252		64
Total loans	$	18,060	$	337	$	135

Federal regulations and our loan policy require that the Company utilize an internal asset classification system as a means of reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, consistent with Federal banking regulations, as a part of its credit monitoring system. Management currently classifies problem and potential problem assets as “special mention”, “substandard,” “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the three aforementioned categories but possess weaknesses are required to be designated “special mention.”

The following tables present the classes of the loan portfolio in which a formal risk weighting system is utilized summarized by the aggregate “Pass” and the criticized category of “special mention”, and the classified categories of “substandard”, “doubtful” and “loss” within the Company’s risk rating system as applied to the loan portfolio. The Company had no loans classified as “doubtful” or “loss” at either of the dates presented.

	March 31, 2017
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	-	$	1,657	$	574	$	2,231
Multi-family residential		13,710		-		-		13,710
Commercial real estate		92,208		1,469		2,176		95,853
Construction and land development		77,461		-		8,703		86,164
Total loans	$	183,379	$	3,126	$	11,453	$	197,958

	September 30, 2016
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	-	$	1,681	$	1,212	$	2,893
Multi-family residential		12,144		-		334		12,478
Commercial real estate		76,185		943		2,731		79,859
Construction and land development		11,551		-		10,288		21,839
Commercial business		99		-		-		99
Total loans	$	99,979	$	2,624	$	14,565	$	117,168

The Company evaluates the classification of one-to-four family residential and consumer loans primarily on a pooled basis. If the Company becomes aware that adverse or distressed conditions exist that may affect a particular single-family residential loan, the loan is downgraded following the above definitions of special mention, substandard, doubtful and loss.

The following tables represent loans in which a formal risk rating system is not utilized, but loans are segregated between performing and non-performing based primarily on delinquency status. Non-performing loans that would be included in the table are those loans greater than 90 days past due as to principal and/or interest that do not have a designated risk rating.

	March 31, 2017
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	356,816	$	6,378	$	363,194
Leases		5,491		-		5,491
Consumer		7,442		-		7,442
Total loans	$	369,749	$	6,378	$	376,127
	September 30, 2016
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	226,394	$	4,244	$	230,638
Leases		3,286		-		3,286
Consumer		799		-		799
Total loans	$	230,479	$	4,244	$	234,723

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is due or overdue, as the case may be. The following table presents the loan categories of the loan portfolio summarized by the aging categories of performing and delinquent loans and nonaccrual loans:

	March 31, 2017
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	361,265	$	1,034	$	3,126	$	-	$	1,034	$	365,425	$	6,378
Multi-family residential		13,710		-		-		-		-		13,710		-
Commercial real estate		94,247		260		1,346		-		260		95,853		1,346
Construction and land development		77,469		-		8,695		-		-		86,164		8,695
Leases		5,402		89		-		-		89		5,491		-
Consumer		7,436		6		-		-		6		7,442		-
Total loans	$	559,529	$	1,389	$	13,167	$	-	$	1,389	$	574,085	$	16,419
	September 30, 2016
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	228,904	$	1,860	$	2,767	$	-	$	1,860	$	233,531	$	4,244
Multi-family residential		12,478		-		-		-		-		12,478		-
Commercial real estate		78,513		-		1,346		-		-		79,859		1,346
Construction and land development		11,551		-		10,288		-		-		21,839		10,288
Commercial business		99		-		-		-		-		99		-
Leases		3,286		-		-		-		-		3,286		-
Consumer		799		-		-		-		-		799		-
Total loans	$	335,630	$	1,860	$	14,401	$	-	$	1,860	$	351,891	$	15,878

The allowance for loan losses is established through a provision for loan losses charged to expense. The Company maintains the allowance at a level believed to cover all known and inherent losses in the portfolio that are both probable and reasonable to estimate at each reporting date. Management reviews the allowance for loan losses no less than quarterly in order to identify these inherent losses and to assess the overall collection probability for the loan portfolio in view of these inherent losses. For each primary type of loan, a loss factor is established reflecting an estimate of the known and inherent losses in such loan type contained in the portfolio using both a quantitative analysis as well as consideration of qualitative factors. The evaluation process includes, among other things, an analysis of delinquency trends, non-performing loan trends, the level of charge-offs and recoveries, prior loss experience, total loans outstanding, the volume of loan originations, the type, size and geographic concentration of the Company’s loans, the value of collateral securing the loans, the borrowers’ ability to repay and repayment performance, the number of loans requiring heightened management oversight, local economic conditions and industry experience.

Commercial real estate loans entail significant additional credit risks compared to owner-occupied one-to-four family residential mortgage loans, as they generally involve large loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment experience on loans secured by income-producing properties typically depends on the successful operation of the related real estate project and/or business operation of the borrower who is, in some cases, also the primary occupant, and thus may be subject to a greater extent to the effects of adverse conditions in the real estate market and in the economy in general. Commercial business loans typically involve a higher risk of default than residential loans of like duration since their repayment is generally dependent on the successful operation of the borrower’s business and the sufficiency of collateral, if any. Land acquisition, development and construction lending exposes the Company to greater credit risk than permanent mortgage financing. The repayment of land acquisition, development and construction loans depends upon the sale of the property to third parties or the availability of permanent financing upon completion of all improvements. These events may adversely affect the sale of the properties, potentially reducing both the borrowers’ ability to make required payments as well as reducing the value of the collateral property. Such lending is additionally subject to the risk that if the estimate of construction cost proves to be inaccurate, the Company potentially will be compelled to advance additional funds to allow completion of the project. In addition, if the estimate of value proves to be inaccurate, the Company may be confronted with a project, when completed, having less value than the loan amount. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company would be able to recover the entire unpaid portion of the loan.

The following tables summarize the primary segments of the allowance for loan losses. Activity in the allowance is presented for the both three and six month periods ended March 31, 2017 and 2016:

	Three Months Ended March 31, 2017
	One- to four-family residential			Multi- family residential			Commercial real estate			Construction and land development			Leases		Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at December 31, 2016	$	1,564		$	135		$	963		$	415		$	28	$	35		$	314	$	3,454
Charge-offs		(113	)		-			-			(1,819	)		-		(16	)		-		(1,948	)
Recoveries		25			-			-			-			-		-			-		25
Provision		(126	)		(13	)		(101	)		2,439			-		116			50		2,365
ALLL balance at March 31, 2017	$	1,350		$	122		$	862		$	1,035		$	28	$	135		$	364	$	3,896

	Six Months Ended March  31, 2017
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Commercial business			Leases		Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2016	$	1,627		$	137		$	859	$	316		$	1		$	21	$	10		$	298	$	3,269
Charge-offs		(113	)		-			-		(1,819	)		-			-		(16	)		-		(1,948	)
Recoveries		25			-			-		-			-			-		-			-		25
Provision		(189	)		(15	)		3		2,538			(1	)		7		141			66		2,550
ALLL balance at March 31, 2017	$	1,350		$	122		$	862	$	1,035		$	-		$	28	$	135		$	364	$	3,896

	Three Months Ended March 31, 2016
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at December 31, 2016	$	1,471		$	58		$	359	$	757		$	8		$	266	$	2,919
Charge-offs		-			-			-		-			-			-		-
Recoveries		-			-			-		44			-			-		44
Provision		40			(15	)		69		(28	)		(1	)		10		75
ALLL balance at March 31, 2016	$	1,511		$	43		$	428	$	773		$	7		$	276	$	3,038
	Six Months Ended March  31, 2016
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2015	$	1,635		$	66		$	231	$	724		$	5		$	269	$	2,930
Charge-offs		(11	)		-			-		-			-			-		(11	)
Recoveries		-			-			-		44			-			-		44
Provision		(113	)		(23	)		197		5			2			7		75
ALLL balance at March 31, 2016	$	1,511		$	43		$	428	$	773		$	7		$	276	$	3,038

The Company recorded a provision for loan losses in the amount of $2.4 million and $2.6 million for the three and six months period ended March 31, 2017, respectively, compared to $75,000 for both of the comparable three and six months periods in 2016. During the quarter ended March 31, 2017, the Company recorded a $1.9 million charge off related to Company’s second largest borrowing relationship; the remainder of the increase was due to increased balances of construction and development and consumer loans,

At March 31, 2017, the Company had ten loans aggregating $6.9 million that were classified as troubled debt restructurings (“TDRs”). Three of such loans aggregating $4.9 million as of March 31, 2017 were classified as non-performing and were on non-accrual status: with regard to one of such loans in the amount of $1.4 million, management has concerns as to whether the borrower has sufficient cashflow to continue to make scheduled payments eventhough the borrower had made all agreed upon payments. The two remaining loans totaling $3.5 million of which $614,000 was charged off in the current quarter (which are part of the Company’s second largest lending relationship) are in default. The Company did not restructure any debt during the three and six month periods ended March 31, 2017 or during the three and six month periods ended March 31, 2016. Two loans on construction and development loans totaling $2.8 million and a commercial real estate loan for $730,000 were in default as of March 31, 2017. All three loans were a part of the group related loans extended to the Company’s second largest borrower.

XML

DEPOSITS

6 Months Ended

Mar. 31, 2017

Deposits [Abstract]

DEPOSITS

6. DEPOSITS

Deposits consist of the following major classifications:

	March 31,					September 30,
	2017					2016
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Money market deposit accounts	$	87,107		14.6	%	$	55,552		14.3	%
Interest-bearing checking accounts		54,763		9.2			34,984		9.3
Non interest-bearing checking accounts		9,272		1.6			3,804		0.7
Passbook, club and statement savings		107,335		18.0			70,924		18.2
Certificates maturing in six months or less		125,124		21.0			97,418		25.0
Certificates maturing in more than six months		211,509		35.6			126,519		32.5
Total	$	595,110		100.0	%	$	389,201		100.0	%

Certificates of $250,000 and over totaled $27.9 million as of March 31, 2017 and $17.0 million as of September 30, 2016.

XML

ADVANCES FROM FEDERAL HOME LOAN BANK

6 Months Ended

Mar. 31, 2017

Advances from Federal Home Loan Banks [Abstract]

ADVANCES FROM FEDERAL HOME LOAN BANK

7. ADVANCES FROM FEDERAL HOME LOAN BANK

Short-Term

The following table reflects the outstanding balances and related information of short-term borrowings from the FHLB.

	Three Months			Six Months
	Ended			Ended
(Dollar amount in thousands)	March 31, 2016			March 31, 2016
Balance at quarter-end	$	27,000		$	27,000
Average balance outstanding		27,000			23,500
Maximum month-end balance		27,000			27,000
Weight-average rate at period end		1.00	%		1.00	%
Weight-average rate during the period		1.00	%		1.00	%

There were no short-term borrowings outstanding for the three and six month periods ended March 31, 2016.

As of March 31, 2017, $20.0 million of the outstanding balance is related to two $10.0 million 30 day FHLB advance associated with an interest rate swap contract with a weighted average effective cost of 117 basis points.

Average balances outstanding during the year represent daily average balance and interest rates represent interest expense divided by the related average balance.

The Bank maintains borrowing facilities with the FHLB and Federal Reserve Bank and the terms and interest rate are subject to change on the date of execution.

Long-Term

Pursuant to collateral agreement with the FHLB of Pittsburgh, advances are secured by a blanket collateral of loans held by the Bank and qualifying fixed-income securities and FHLB stock. The long-term advances outstanding as of March 31, 2017 are as follows:

Type	Maturity Date	Amount		Coupon			Call Date
		(dollars in thousands)
Fixed Rate -Advance	17-Nov-17		10,000		1.21	%	Not Applicable
Fixed Rate -Amortizing	1-Dec-17		1,511		1.16	%	Not Applicable
Fixed Rate -Advance	4-Dec-17		2,000		1.15	%	Not Applicable
Fixed Rate -Advance	19-Mar-18		4,939		2.53	%	Not Applicable
Fixed Rate -Advance	19-Mar-18		4,959		2.13	%	Not Applicable
Fixed Rate -Advance	20-Jun-18		2,981		1.86	%	Not Applicable
Fixed Rate -Advance	25-Jun-18		2,973		2.09	%	Not Applicable
Fixed Rate -Advance	27-Aug-18		6,729		4.15	%	Not Applicable
Fixed Rate -Advance	15-Nov-18		2,980		1.89	%	Not Applicable
Fixed Rate -Advance	16-Nov-18		7,500		1.40	%	Not Applicable
Fixed Rate -Advance	26-Nov-18		1,989		2.35	%	Not Applicable
Fixed Rate -Advance	3-Dec-18		3,000		1.54	%	Not Applicable
Fixed Rate -Advance	16-Aug-19		2,929		2.66	%	Not Applicable
Fixed Rate -Advance	9-Oct-19		1,958		2.54	%	Not Applicable
Fixed Rate -Amortizing	18-Nov-19		4,098		1.53	%	Not Applicable
Fixed Rate -Advance	26-Nov-19		2,949		1.81	%	Not Applicable
Fixed Rate -Advance	22-Jun-20		2,927		2.64	%	Not Applicable
Fixed Rate -Advance	24-Jun-20		1,936		2.85	%	Not Applicable
Fixed Rate -Advance	27-Jul-20		2,049		1.38	%	Not Applicable
Fixed Rate -Advance	17-Aug-20		1,921		3.06	%	Not Applicable
Fixed Rate -Advance	9-Oct-20		1,929		2.92	%	Not Applicable
Fixed Rate -Advance	27-Jul-21		249		1.52	%	Not Applicable
Fixed Rate -Advance	28-Jul-21		249		1.48	%	Not Applicable
Fixed Rate -Advance	28-Jul-21		249		1.42	%	Not Applicable
Fixed Rate -Advance	19-Aug-21		249		1.55	%	Not Applicable
Fixed Rate -Advance	7-Oct-21		1,899		3.19	%	Not Applicable
Fixed Rate -Advance	12-Oct-21		1,905		3.23	%	Not Applicable
		$	79,057		2.15	%	(a)
(a) Weighted average coupon rate.

XML

DERIVATIVES

6 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

8. DERIVATIVES

The Company has contracted with a third party to participate in pay-fixed interest rate swap contracts. The amount of swaps outstanding at March 31, 2017 is being utilized to hedge $21.1 million in floating-rate debt consisting of FHLB advances.

Below is a summary of the interest rate swap agreements and the terms there of as of March 31, 2017.

	March 31, 2017
	Notional		Pay			Receive	Maturity	Unrealized
	Amount		Rate			Rate	Date	Gain
						(dollar in thousands)
Interest rate swap contract	$	10,000		1.15	%	1 Month Libor	6-Apr-21	$	250
Interest rate swap contract		10,000		1.18	%	1 Month Libor	13-Jun-21		260
Interest rate swap contract		1,100		4.10	%	1 Month Libor +276 bp	1-Aug-26		72
								$	582

All three interest rate swaps are carried at fair value in accordance with FASB ASC 815 "Derivatives and Hedging."

Below is a summary of the interest rate swap agreement and the terms as of September 30, 2016. They are the same swap agreement that were in force as of March 31, 2017.

	September 30, 2016
	Notinal		Pay			Receive	Maturity	Unrealized
	Amount		Rate			Rate	Date	Loss
						(dollar in thousands)
Interest rate swap contract	$	10,000		1.15	%	1 Mth Libor	6-Apr-21	$	(92	)
Interest rate swap contract		10,000		1.18	%	1 Mth Libor	13-Jun-21		(103	)
Interest rate swap contract		1,100		4.10	%	1 Mth Libor +276 bp	1-Aug-26		(7	)
								$	(202	)

All three interest swaps are carried at fair value in accordance with FASB ASC 815 “Derivatives and Hedging.”

XML

INCOME TAXES

6 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

9. INCOME TAXES

Items that gave rise to significant portions of deferred income taxes are as follows:

	March 31,			September 30,
	2017			2016
Deferred tax assets:	(Dollars in Thousands)
Allowance for loan losses	$	1,593		$	1,289
Nonaccrual interest		292			163
Accrued vacation		12			13
Capital loss carryforward		378			378
Split dollar life insurance		18			18
Post-retirement benefits		93			96
Unrealized losses on available for sale securities		860			-
Goodwill		2,042			-
Unrealized losses on interest rate swaps		-			69
Employee benefit plans		382			434
Total deferred tax assets		5,670			2,460
Valuation allowance		(378	)		(378	)
Total deferred tax assets, net of valuation allowance		5,292			2,082
Deferred tax liabilities:
Property		423			423
Unrealized gains on available for sale securities		-			500
Unrealized gains on interest rate swaps		198			-
Miscellaneous		12			12
Deferred loan fees		455			578
Total deferred tax liabilities		1,088			1,513
Net deferred tax assets	$	4,204		$	569

The Company establishes a valuation allowance for deferred tax assets when management believes that the use of the deferred tax assets is not likely to be fully realized through a carry back to taxable income in prior years or future reversals of existing taxable temporary differences, and/or to a lesser extent, future taxable income. The tax deduction generated by the redemption of the shares of a mutual fund held by the Bank and the subsequent impairment charge on the assets acquired through the redemption in kind are considered capital losses and can only be utilized to the extent of capital gains recognized over a five year period, resulting in the establishment of a valuation allowance for the carryforward period. The valuation allowance totaled $378,000 at March 31, 2017 and September 30, 2016.

There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statements of Operations as a component of income tax expense. The Company’s federal and state income tax returns for taxable years through September 30, 2013 have been closed for purposes of examination by the Internal Revenue Service and the Pennsylvania Department of Revenue.

XML

STOCK COMPENSATION PLANS

6 Months Ended

Mar. 31, 2017

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK COMPENSATION PLANS

10. STOCK COMPENSATION PLANS

As of December 31, 2016, the Boards of Directors of the Company and the Bank voted to terminate the Bank’s employee stock ownership plan (“ESOP”) effective December 31, 2016. The Company has submitted the proper notices with the Internal Revenue Service and is awaiting receipt of a determination letter in connection with the termination of the ESOP before the final allocation is made to the individual participants. The Bank maintained an ESOP for substantially for the benefit all its full-time employees. The ESOP purchased 427,057 shares (on a converted basis) of common stock for an aggregate cost of approximately $4.5 million in fiscal 2005 in connection with the Bank’s mutual holding company reorganization. The ESOP purchased in connection with the second-step conversion of the Bank an additional 255,564 shares during December 2013 and an additional 30,100 shares at the beginning of January 2014, of the Company’s common stock for an aggregate cost of approximately $3.1 million. The shares were purchased with the proceeds of two loans from the Company. Shares of the Company’s common stock purchased by the ESOP are held in a suspense account until released for allocation to participants as the loans are repaid. Shares are allocated to each eligible participant based on the ratio of each such participant’s compensation, as defined in the ESOP, to the total compensation of all eligible plan participants. As the unearned shares are released from the suspense account, the Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares upon release differs from the cost of such shares, the difference is charged or credited to equity as additional paid-in capital. As of March 31, 2017, the ESOP held 468,156 shares of which a total of 243,734 shares were allocated to participants and had committed to release an additional 35,517 shares as of December 31, 2016. For the six months ended March 31, 2017 and 2016, the Company recognized $139,000 and $265,000, respectively, in compensation expense related to the ESOP. In connection with the termination of the ESOP, the ESOP was required to repay the outstanding indebtness the collateral held in the suspense account. As of January 1, 2017, the Company and Trust purchased from the ESOP 303,115 shares of common stock to pay off the remaining $5.2 million of the outstanding loan balances. Approximately 115,000 unallocated shares remain after the repayment of the indebtness will be distributed to the remaining active plan participants.

The Company maintains the 2008 RRP which is administered by a committee of the Board of Directors of the Company. The RRP provides for the grant of shares of common stock of the Company to officers, employees and directors of the Company. In order to fund the grant of shares under the RRP, the 2008 RRP purchased 213,528 shares (on a converted basis) of the Company’s common stock in the open market for an aggregating cost of approximately $2.5 million, at an average purchase price per share of $11.49. The Company made sufficient contributions to the 2008 RRP to fund these purchases. As of March 31, 2017, all the shares had been awarded as part of the 2008 RRP. Shares subject to awards under the 2008 RRP generally vest at the rate of 20% per year over five years. During February 2015, shareholders approved the 2014 Stock Incentive Plan (the “2014 SIP”). As part of the 2014 SIP, a maximum of 285,655 shares of common stock can be awarded as restricted stock awards or units, of which 233,500 shares were awarded during February 2015 of which 45,000 shares have been forfeited as of March 31, 2017. In August 2016, the Company granted 7,473 shares under the 2008 RRP an 3,027 shares under the 2014 SIP. In March 2017, the Company granted 17,128 shares under the 2014 SIP.

Compensation expense related to the shares subject to restricted stock awards granted is recognized ratably over the five-year vesting period in an amount which totals the grant date fair value multiplied by the number of shares subject to the grant. During the three and six months ended March 31, 2017, an aggregate of $145,000 and $280,000, respectively was recognized in compensation expense for the grants pursuant to the 2008 RRP and the grants pursuant to the 2014 SIP. An income tax benefit of $95,000 and $39,000, was recognized for the three and six months ended March 31, 2017, respectively. During the three and six months ended March 31, 2016, $115,000 and $243,000 was recognized in compensation expense for the grants pursuant to the 2008 RRP and the grants pursuant to the 2014 SIP. An income tax benefit of $39,000 and $83,000 was recognized for the three and six months ended March 31, 2016. At March 31, 2017, approximately $1.3 million in additional compensation expense for shares awarded related to the 2008 RRP and 2014 SIP remained unrecognized.

A summary of the Company’s non-vested stock award activity for the six months ended March 31, 2017 and 2016 is presented in the following tables:

	Six Months Ended  March 31, 2017
	Number of Shares (1)			Weighted Average  Grant Date Fair  Value
Nonvested stock awards at October 1, 2016		172,788		$	12.03
Granted		17,128			17.43
Forfeited		-			-
Vested		(43,018	)		11.61
Nonvested stock awards at the March 31, 2017		146,898		$	12.78
	Six Months Ended  March 31, 2016
	Number of  Shares			Weighted Average  Grant Date Fair  Value
Nonvested stock awards at October 1, 2015		241,428		$	11.74
Granted		-			-
Forfeited		(36,762	)		11.55
Vested		(49,511	)		11.47
Nonvested stock awards at the March 31, 2016		155,155		$	11.87

The Company maintains the 2008 Stock Option Plan (the “2008 Option Plan”) which authorizes the grant of stock options to officers, employees and directors of the Company to acquire shares of common stock with an exercise price at least equal to the fair market value of the common stock on the grant date. Options generally become vested and exercisable at the rate of 20% per year over five years and are generally exercisable for a period of ten years after the grant date. A total of 533,808 shares of common stock were approved for future issuance pursuant to the 2008 Stock Option Plan. As of March 31, 2017, all of the options had been awarded under the 2008 Option Plan. As of March 31, 2017, 467,758 options (on a converted basis) were vested under the 2008 Option Plan. The 2014 SIP reserved up to 714,145 shares for issuance pursuant to options. Options to purchase 587,112 shares were awarded during February 2015, 608,737 shares pursuant to the 2014 SIP and the remainder pursuant to the 2008 Option Plan. During August 2016 the Company granted 18,866 shares under the 2008 Option Plan and 8,634 shares under the 2014 SIP. In March 2017, the Company granted 22,828 shares under the 2014 SIP.

A summary of the status of the Company’s stock options under the 2008 Option Plan and the 2014 SIP as of March 31, 2017 and 2016 are presented below:

	Six Months Ended  March 31, 2017
	Number of  Shares			Weighted Average  Exercise Price
Outstanding at October 1, 2016		921,909		$	11.70
Granted		22,828			11.43
Exercised		(32,224	)		11.50
Forfeited		-			-
Outstanding at  March 31, 2017		912,513		$	11.85
Exercisable at March 31, 2017		579,078		$	11.43
	Six Months Ended  March 31, 2016
	Number of  Shares			Weighted Average  Exercise Price
Outstanding at October 1, 2015		1,074,430		$	11.92
Granted		-			-
Exercised		(130,535	)		11.49
Forfeited		(93,939	)		11.55
Outstanding at March 31, 2016		849,956		$	12.03
Exercisable at March 31, 2016		347,037		$	11.38

The weighted average remaining contractual term was approximately 4.7 years for options outstanding as of March 31, 2017.

The estimated fair value of options granted during fiscal 2009 was $2.98 per share, $2.92 for options granted during fiscal 2010, $3.34 for options granted during fiscal 2013, $4.67 for the options granted during fiscal 2014, $4.58 for options granted during fiscal 2015, $2.13 for options granted during fiscal 2016 and $3.18 for options granted during fiscal 2017. The fair value for grants made in fiscal 2015 was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: an exercise and fair value of $12.23, expected term of seven years, volatility rate of 38.16%, interest rate of 1.62% and a yield of 0.98%. The fair value for grants made in fiscal 2016 was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: an exercise and fair value of $14.42, expected term of seven years, volatility of 13.82%, interest rate of 1.36% and a yield of 0.80%. The fair value for grants made in March 2017 was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: an exercise and fair value of $17.43, expected term of seven years, volatility of 14.4%, interest rate of 2.22% and a yield of 0.69%.

During the three and six months ended March 31, 2017, $138,000 and $268,000, respectively, was recognized in compensation expense for options granted pursuant to the 2008 Option Plan and the 2014 SIP. A tax benefit of $16,000 and $32,000 was recognized for the three and six months ended March 31, 2017, respectively. During the three and six months ended March 31, 2016, $112,000 and $248,000, respectively, was recognized in compensation expense for options granted pursuant to the 2008 Option Plan and the 2014 SIP. A tax benefit of $13,000 and $29,000, respectively, was recognized for the three and six months ended March 31, 2016.

At March 31, 2017, there was approximately $1.4 million in additional compensation expense to be recognized for awarded options which remained outstanding and unvested at such date. The weighted average period over which this expense will be recognized is approximately 3.1 years.

XML

COMMITMENTS AND CONTINGENT LIABILITIES

6 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

11. COMMITMENTS AND CONTINGENT LIABILITIES

At March 31, 2017, the Company had $13.9 million in outstanding commitments to originate fixed-rate loans with market interest rates ranging from 4.00% to 5.50%. At September 30, 2016, the Company had $9.9 million in outstanding commitments to originate fixed-rate loans with market interest rates ranging from 3.75% to 5.0%. The aggregate undisbursed portion of loans-in-process amounted to $45.2 million at March 31, 2017 and $5.4 million at September 30, 2016.

The Company also had commitments under unused lines of credit of $7.2 million as of March 31, 2017 and $3.3 million as of September 30, 2016 and letters of credit outstanding of $1.5 million as of March 31, 2017 and $1.9 million as of September 30, 2016.

Among the Company’s contingent liabilities are exposures to limited recourse arrangements with respect to the Company’s sales of whole loans and participation interests. At March 31, 2017, the exposure, which represents a portion of credit risk associated with the interests sold, amounted to $1.9 million related to loans sold to FHLB. This exposure is for the life of the related loans and payables, on our proportionate share, as actual losses are incurred. These loans are seasoned loans and remain performing.

The Company is involved in various legal proceedings occurring in the ordinary course of business. Management of the Company, based on discussions with litigation counsel, believes that such proceedings will not have a material adverse effect on the financial condition, operations or cash flows of the Company. However, there can be no assurance that any of the outstanding legal proceedings to which the Company is a party will not be decided adversely to the Company's interests and not have a material adverse effect on the financial condition and operations of the Company.

XML

FAIR VALUE MEASUREMENT

6 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT

12. FAIR VALUE MEASUREMENT

The fair value estimates presented herein are based on pertinent information available to management as of March 31, 2017 and September 30, 2016, respectively. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Generally accepted accounting principles used in the United States establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.

The three broad levels of hierarchy are as follows:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Those assets as of March 31, 2017 which are to be measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	20,945	$	-	$	20,945
Mortgage-backed securities - U.S. Government agencies		-		132,792		-		132,792
Corporate bonds		-		36,755		-		36,755
FHLMC preferred stock		66		-		-		66
Interest rate swap contracts		-		582		-		582
Total	$	66	$	190,624	$	-	$	190,690

Those assets as of September 30, 2016 which are measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	21,024	$	-	$	21,024
Mortgage-backed securities - U.S. Government agencies		-		91,575		-		91,575
Corporate bonds		-		26,053		-		26,053
FHLMC preferred stock		42		-		-		42
Total	$	42	$	138,652	$	-	$	138,694
Liabilities:
Interest rate swap contracts	$	-	$	202	$	-	$	202
Total	$	-	$	202	$	-	$	202

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans and real estate owned at fair value on a non-recurring basis.

Impaired Loans

The Company considers loans to be impaired when it becomes more likely than not that the Company will be unable to collect all amounts due (principle and interest) in accordance with the contractual terms of the loan agreements. Collateral dependent impaired loans are based on the fair value of the collateral which is based on appraisals and would be categorized as Level 2 measurement.  In some cases, adjustments are made to the appraised values for various factors including the age of the appraisal, age of the comparable included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement. These loans are reviewed for impairment and written down to their net realizable value by charges against the allowance for loan losses. The collateral underlying these loans had a fair value in excess of $16.9 million as of March 31, 2017.

Real Estate Owned

Once an asset is determined to be uncollectible, the underlying collateral is generally repossessed and reclassified to foreclosed real estate and repossessed assets. These repossessed assets are carried at the lower of cost or fair value of the collateral, based on independent appraisals, less cost to sell and would be categorized as Level 2 measurement. In some cases, adjustments are made to the appraised values for various factors including age of the appraisal, age of the comparable included in the appraisal, and known changes in the market and in the collateral. As a result, the evaluations are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement.

Summary of Non-Recurring Fair Value Measurements

	At March 31, 2017
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	16,945	$	16,945
Real estate owned		-		-		192		192
Total	$	-	$	-	$	17,137	$	17,137
	At September 30, 2016
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	19,429	$	19,429
Real estate owned		-		-		581		581
Total	$	-	$	-	$	20,010	$	20,010

The following table provides information describing the valuation processes used to determine nonrecurring fair value measurements categorized within Level 3 of the fair value hierarchy:

	At March 31, 2017
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	16,945	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	6% to 46% discount/ 10%
Real estate owned	$	192	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

	At September 30, 2016
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	19,429	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	6% to 46% discount/10%
Real estate owned	$	581	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various Level 3 inputs, which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

The fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

					Fair Value Measurements at
					March 31, 2017
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	13,058	$	13,058	$	13,058	$	-	$	-
Certificate of deposits		1,853		1,853		1,853		-		-
Investment and mortgage-backed securities available for sale		190,108		190,108		66		190,042		-
Investment and mortgage-backed securities held to maturity		58,197		56,540		-		56,540		-
Loans receivable, net		521,885		524,148		-		-		524,148
Accrued interest receivable		2,626		2,626		2,626		-		-
Other real estate owned		192		192		192		-		-
Federal Home Loan Bank stock		5,699		5,699		5,699		-		-
Bank owned life insurance		27,709		27,709		27,709		-		-
Interest rate swap contracts		582		582		-		582		-
Liabilities:
Checking accounts		64,035		64,035		64,035		-		-
Money market deposit accounts		87,107		87,107		87,107		-		-
Passbook, club and statement savings accounts		107,335		107,335		107,335		-		-
Certificates of deposit		336,633		338,846		-		-		338,846
Advances from FHLB short-term		27,000		27,000		27,000				-
Advances from FHLB long-term		79,057		78,271		-		-		78,271
Accrued interest payable		790		790		790		-		-
Advances from borrowers for taxes and insurance		2,789		2,789		2,789		-		-

					Fair Value Measurements at
					September 30, 2016
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	12,440	$	12,440	$	12,440	$	-	$	-
Certificate of deposits		1,853		1,853		1,853		-		-
Investment and mortgage-backed securities available for sale		138,694		138,694		42		138,652		-
Investment and mortgage-backed securities held to maturity		39,971		40,700		-		40,700		-
Loans receivable, net		344,948		344,100		-		-		344,100
Accrued interest receivable		1,928		1,928		1,928		-		-
Federal Home Loan Bank stock		2,463		2,463		2,463		-		-
Bank owned life insurance		13,055		13,055		13,055		-		-
Liabilities:
Checking accounts		38,788		38,788		38,788		-		-
Money market deposit accounts		55,552		55,552		55,552		-		-
Passbook, club and statement savings accounts		70,924		70,924		70,924		-		-
Certificates of deposit		223,937		225,383		-		-		225,383
Accrued interest payable		1,403		1,403		1,403		-		-
Advances from FHLB -short-term		20,000		20,000		20,000		-		-
Advances from FHLB -long-term		30,638		30,222		-		-		30,222
Advances from borrowers for taxes and insurance		1,748		1,748		1,748		-		-
Interest rate swap contracts		202		202		-		202		-

Cash and Cash Equivalents—For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

Investments and Mortgage-Backed Securities—The fair value of investment securities and mortgage-backed securities is based on quoted market prices, dealer quotes, and prices obtained from independent pricing services.

Loans Receivable—The fair value of loans is estimated based on present value using the current market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The carrying value that fair value is compared to is net of the allowance for loan losses and other associated premiums and discounts. Due to the significant judgment involved in evaluating credit quality, loans are classified within Level 3 of the fair value hierarchy.

Accrued Interest Receivable – For accrued interest receivable, the carrying amount is a reasonable estimate of fair value.

Federal Home Loan Bank (FHLB) Stock—Although FHLB stock is an equity interest in an FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. The estimated fair value approximates the carrying amount.

Bank Owned Life Insurance—The fair value of bank owned life insurance is based on the cash surrender value obtained from an independent advisor that is derivable from observable market inputs.

Checking Accounts, Money Market Deposit Accounts, Passbook Accounts, Club Accounts, Statement Savings Accounts, and Certificates of Deposit—The fair value of passbook accounts, club accounts, statement savings accounts, checking accounts, and money market deposit accounts is the amount reported in the financial statements. The fair value of certificates of deposit is based on market rates currently offered for deposits of similar remaining maturity.

Short-term Advances from Federal Home Loan Bank—The fair value of advances from FHLB is the amount payable on demand at the reporting date.

Long-term Advances from Federal Home Loan Bank — The fair value of advances from FHLB is the amount payable on demand at the reporting date.

Accrued Interest Payable – For accrued interest payable, the carrying amount is a reasonable estimate of fair value.

Interest rate swaps – The fair values of the interest rate swap contracts are based upon the estimated amount the Company would receive or pay, as applicable, to terminate the contracts.

Advances from borrowers for taxes and insurance – For advances from borrowers for taxes and insurance, the carrying amount is a reasonable estimate of fair value.

Commitments to Extend Credit and Letters of Credit—The majority of the Bank’s commitments to extend credit and letters of credit carry current market interest rates if converted to loans. Because commitments to extend credit and letters of credit are generally unassignable by either the Bank or the borrower, they only have value to the Bank and the borrower. The estimated fair value approximates the recorded deferred fee amounts, which are not significant.

XML

GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

13. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company’s goodwill and intangible assets are related to the acquisition of Polonia Bancorp on January 1, 2017.

	Balance							Balance
	January 1,		Additions/					March 31,		Amortization
	2017		Adjustments		Amortization			2017		Period
Goodwill	$	-	$	7,163	$	-		$	7,163
Core deposit intangible		-		822		(37	)		785		10 years
	$	-	$	7,985	$	(37	)	$	7,948

As of March 31, 2017, the current fiscal year and the future amortization fiscal periods expense for the core deposit intangible is:

(in thousands)
2017	$	75
2018		142
2019		127
2020		112
Thereafter		366

XML

BUSINESS COMBINATIONS

6 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

BUSINESS COMBINATIONS

14. BUSINESS COMBINATIONS

On January 1, 2017, the previously announced proposed acquisition (the “Merger”) of Polonia Bancorp pursuant to the Agreement of Plan of Merger by and between Polonia Bancorp and the Company, dated as of June 2, 2016 (the “ Merger Agreement”) was completed. The shareholders of Polonia Bancorp had the option to receive $11.09 per share in cash or 0.7460 of a share of the Company common stock for each share of Polonia Bancorp common stock held thereby, subject to allocation provisions to assure that, in the aggregate, Polonia Bancorp shareholders received total merger consideration that consisted of 50% stock and 50% cash. As a result of Polonia Bancorp shareholder stock and cash elections and the related proration provisions of the Merger Agreement, the Company issued 1,274,197 shares of its common stock and approximately $18.9 million was paid in cash for the Merger.

In connection with the Merger, the consideration paid and the estimated fair value of identifiable assets and liabilities assumed as of the date of the Merger are summarized in the following table:

(dollars in thousands)
Consideration paid:
Common stock issued (1,274,197 shares) at a fair value per share of $17.12 per share.	$	21,814
Cash for common stock exchanged		18,944
Cash in lieu of fractional shares		1
		40,759
Assets acquired:
Cash and due from banks		47,901
Investments available for sale		42,164
Loans		160,157
Premises and equipment		6,902
Deferred taxes		3,921
Bank-owned life insurance		4,316
Core deposit intangible		822
Other assets		5,802
Total assets		271,985
Liabilities assumed:
Deposits		172,243
FHLB advances short-term		7,000
FHLB advances long -term		50,232
Other liabilities		8,914
Total liabilities		238,389
Net assets acquired		33,596
Goodwill resulting from the acquisition	$	7,163

The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed as of the date of acquisition of Polonia Bancorp. Core deposit intangibles will be amortized over a 10 years using an accelerated method. Goodwill will not be amortized, but instead will be evaluated for impairment.

(dollars in thousands, except per share data)
Purchase Consideration
Polonia Common Stock:
Total Shares of Common Stock Outstanding		3,416,311
Common Stock Issued Cap		1,708,155
Shares Redeemed for Cash Cap		1,708,156
Prudential Common Stock Issued (conversion rate 0.7460)		1,274,197
Prudential Closing Price at December 31, 2016	$	17.12
Cash-out rate paid per share for Polonia Common Stock	$	11.09
Purchase consideration assigned to Polonia shares exchanged for Prudential Common Stock	$	21,814
Cash Paid to Polonia for Polonia shares	$	18,943
Cash Paid for fractional shares	$	1
	$	40,758
Net Assets Acquired
Polonia stockholders' equity		35,412
Core deposit intangible assets		822
Estimated adjustments to reflect assets acquired at fair value:
Investment securities		(781	)
Portfolio loans		(4,643	)
Allowance for loan and lease losses		1,002
Premises		3,049
Other Assets		(74	)
Deferred Taxes		934
Total fair value adjustment to assets acquired		309
Estimated adjustments to reflect liabilities assumed at fair value:
Time deposits		894
Borrowings		1,232
Total fair value adjustment to liabilities assumed		2,126
Total net assets acquired		33,595
Goodwill resulting from merger		7,163

Pro Forma Income Statements

The following pro forma income statements for the three and six months ended March 31, 2017 and 2016 presents pro forma results of operations of the combined institution (Polonia Bancorp and the Company) had the merger occurred on January 1, 2017 and 2016. The pro forma income statement adjustments are limited to the effects of fair value mark amortization and accretion and intangible asset amortization. No cost savings or additional merger expenses have been included in the pro forma results of operations for the three and six months ended March 31, 2017 and 2016.

	Three Months Ended
	March 31,
(dollars in thousands, except per share data)	2017			2016
Net interest income		5,299			5,534
Provision for loan and leases losses		2,365			75
Net interest income after provision for loan and lease losses		2,934			5,459
Non-interest income		518			530
Non-interest expenses		6,763			5,137
(Loss) income before income taxes		(3,311	)		852
Income tax (benefit) expense		(1,171	)		312
Net (loss) income		(2,140	)		540
Per share data
Weighed average basic shares outstanding		8,639,908			8,655,077
Dilutive shares		-			270,973
Adjusted weighted-average dilutive shares		8,639,908			8,926,050
Basic (loss) earnings per common share	$	0.28		$	0.06
Dilutive (loss) earnings per common share	$	0.28		$	0.06

(a) Weighted-average basis shares outstanding for both periods reflected are the Company’s weighted-average shares plus the 1,274,197, shares that were issued as consideration for the Merger. The dilutive shares reflect the Company’s estimated diluted shares for the period.

	Six Months Ended
	March 31,
(dollars in thousands, except per share data)	2017			2016
Net interest income		8,947			10,387
Provision for loan and leases losses		2,550			75
Net interest income after provision for loan and lease losses		6,397			10,312
Non-interest income		876			941
Non-interest expenses		9,483			10,403
(Loss) income before income taxes		(2,210	)		850
Income tax (benefit) expense		(801	)		(29	)
Net (loss) income		(1,409	)		879
Per share data
Weighed average basic shares outstanding		9,253,738			8,655,077
Dilutive shares		-			246,791
Adjusted weighted-average dilutive shares		9,253,738			8,901,868
Basic (loss) earnings per common share	$	(0.28	)	$	0.10
Dilutive (loss) earnings per common share	$	(0.28	)	$	0.10

(a) Weighted-average basis shares outstanding for both periods reflected are the Company’s weighted-average shares plus the 1,274,197, shares that were issued as consideration for the Merger. The dilutive shares reflect the Company’s estimated diluted shares for the period

XML

SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation – The accompanying unaudited consolidated financial statements were prepared pursuant to the rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) for interim information and therefore do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the financial statements have been included. The results for the three and six months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2017, or any other period. These financial statements should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions in the Company’s consolidated financial statements are recorded in the allowance for loan losses, goodwill and intangible assets, deferred income taxes, other-than-temporary impairment, and the fair value measurement for financial instruments. Actual results could differ from those estimates.

Share-Based Compensation

Share-Based Compensation – The Company accounts for stock-based compensation issued to employees, and where appropriate, non-employees, at fair value. Under fair value provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award at such date and is recognized as expense over the appropriate vesting period using the straight-line method. The amount of stock-based compensation recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. Determining the fair value of stock-based awards at the date of grant requires judgment, including estimating the expected term of the stock options and the expected volatility of the Company’s stock. In addition, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates or different key assumptions were used, it could have a material effect on the Company’s consolidated financial statements. 

Dividends with respect to non-vested share awards granted pursuant to the Company’s 2008 Recognition and Retention Plan (“2008 Plan”) and held in the Trust (the “Trust”) are held for the benefit of the recipients and are paid out proportionately by the Trust to the recipients of stock awards granted pursuant to the Plan as soon as practicable after the stock awards are earned. A recipient of a share award granted under the 2014 Stock Incentive Plan will not receive any dividends declared on the common stock subject to the award prior to the date the shares are earned.

Treasury Stock

Treasury Stock – Stock held in treasury by the Company is accounted for using the cost method, which treats stock held in treasury as a reduction to total stockholders’ equity. During the six month period ended March 31, 2017, the Company repurchased 303,115 shares of common stock of unallocated shares held in a suspense account by the Bank’s ESOP as collateral with value of $5.2 million in order to payoff the associated loans that were terminated as of December 31, 2016 in connection with the termination of the Bank’s ESOP. In addition, 42,791 shares of common stock were purchased in conjunction with the termination of the Polonia Bank ESOP as a result of the acquisition. The remaining shares purchased were related to the Company buying and selling shares for the benefit of the employee stock plans.

FHLB Stock

FHLB Stock – FHLB stock is classified as a restricted equity security because ownership is restricted and there is not an established market for its resale.  FHLB stock is carried at cost and is evaluated for impairment when certain conditions warrant further consideration. Management concluded that the FHLB stock was not impaired at March 31, 2017.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The ASU’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this ASU specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This ASU is effective, as a result of ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company expects to adopt the revenue recognition guidance on October 1, 2018 using the modified retrospective approach.  A significant amount of the Company’s revenues is derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance.  With respect to noninterest income, the Company is in its preliminary stages of identifying and evaluating the revenue streams and underlying revenue contracts within the scope of the guidance.  The Company is expecting to begin developing processes and procedures during fiscal 2018 to ensure it is fully compliant with these amendments. To date, the Company has not yet identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance; however, the Company’s implementation efforts are ongoing and such assessments may change prior to the October 1, 2018 implementation date.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). The amendments in this ASU require that an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The Company does not expect the adoption of this amendment will have a significant impact to its Consolidated Statements of Income.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. Among other things, this ASU (a) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (g) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (h) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities including not-for-profit entities and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt the amendments in this ASU earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.  A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical expedients it may elect at adoption, but does not anticipate the amendments will have a significant impact on the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the impact to the Company’s balance sheet is estimated to result in less than a 1 percent increase in assets and liabilities. The Company also anticipates additional disclosures to be provided at adoption.

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815). The amendments in this ASU apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a heading instrument under Topic 815. The standards in this ASU clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. For public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. An entity has an option to apply the amendments in this ASU on either a prospective basis or a modified retrospective basis. Early adoption is permitted, including adoption in an interim period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815). The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. The amendments in this ASU clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt host. An entity performing the assessment under the amendments in this ASU is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. For public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. For entities other than public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606). The amendments in this ASU affect entities with transactions included within the scope of Topic 606, which includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. The amendments in this ASU do not change the core principle of the guidance in Topic 606; they simply clarify the implementation guidance on principal versus agent considerations. The amendments in this ASU are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The amendments in this ASU affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements of ASU 2014-09, ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606), which among other things clarifies the objective of the collectability criterion in Topic 606, as well as certain narrow aspects of Topic 606. The amendments in this ASU affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. This ASU is not expected to have a significant impact on the Company’s financial statements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial asset not excluded from the scope that have the contractual right to receive cash. The underlying premise of the ASU is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. This ASU additionally addresses purchased assets and introduces the purchased financial asset with a more-than-insignificant amount of credit deterioration since origination (“PCD”). The accounting for these PCD assets is similar to the existing accounting guidance of FASB Accounting Standards Codification (“ASC”) 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, for purchased credit impaired (“PCI”) assets, except the subsequent improvements in estimated cash flows will be immediately recognized into income, similar to the immediate recognition of subsequent deteriorations in cash flows. Current guidance only allows for the prospective recognition of these cash flow improvements. Because the terminology has been changed to a “more-than-insignificant” amount of credit deterioration, the presumption is that more assets might qualify for this accounting under the Update than those under current guidance. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to the amount of retained earnings as of the beginning of the first reporting period in which the guidance is adopted. A prospective transition approach is required for debt securities. An entity that has previously applied the guidance of ASC 310-30 will prospectively apply the guidance in this Update for PCD assets. A prospective transition approach should be used for PCD assets where upon adoption, the amortized cost basis should be adjusted to reflect the addition of the allowance for credit losses. Upon adoption, the Company expects a change in the processes and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The new guidance may result in an increase in the allowance for loan losses which will also reflect the new requirement to include the non-accretable principal differences on PCI loans; however, the Company is still in the process of determining the magnitude of the increase and its impact on the Company’s financial position or results of operations. In addition, the current accounting policy and procedures for other-than-temporary impairment on investment securities available for sale will be replaced with an allowance approach. The Company is expecting to begin developing and implementing processes and procedures to ensure it is fully compliant with the amendments at the adoption date.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing diversity in practice. Among these include recognizing cash payments for debt prepayment or debt extinguishment as cash outflows for financing activities; cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage; and cash proceeds received from the settlement of bank-owned life insurance policies should be classified as cash inflows from investing activities while the cash payments for premiums on bank-owned policies may be classified as cash outflows for investing activities, operating activities, or a combination of investing and operating activities. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s statement of cash flows.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), which requires recognition of current and deferred income taxes resulting from an intra-entity transfer of any asset (excluding inventory) when the transfer occurs. Consequently, the amendments in this ASU eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those annual reporting periods. For all other entities, the amendments are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual periods beginning after December 15, 2019. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, earlier adoption should be in the first interim period if an entity issues interim financial statements. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to the amount of retained earnings as of the beginning of the period of adoption. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . This ASU, among others things, clarifies that guarantee fees (other than product or service warranties) within the scope of Topic 460, Guarantees, are not within the scope of Topic 606. The effective date and transition requirements for ASU 2016-20 are the same as the effective date and transition requirements for the new revenue recognition guidance. For public entities with a calendar year-end, the new guidance is effective in the quarter and year beginning January 1, 2018. For all other entities with a calendar year-end, the new guidance is effective in the year ending December 31, 2019, and interim periods in 2020. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and/or results of operations.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, which provides a more robust framework to use in determining when a set of assets and activities (collectively referred to as a “set”) is a business. The screening process requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. Public business entities should apply the amendments in this ASU to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this ASU should be applied prospectively on or after the effective date. This ASU is not expected to have a significant impact on the Company’s financial statements.

In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323), Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. This Update adds an SEC paragraph to the Codification following an SEC Staff Announcement about applying Staff Accounting Bulletin (SAB) Topic 11.M. Specifically, this announcement applies to ASU 2014-09, Revenue from Contracts with Customers (Topic 606); ASU 2016-02, Leases (Topic 842); and ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. A registrant should evaluate Updates that have not yet been adopted to determine the appropriate financial statement disclosures about the potential material effects of those Updates on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact that adoption of the Updates referenced in this announcement are expected to have on the financial statements, then in addition to making a statement to that effect, that registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. In this regard, the SEC staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies that the registrant expects to apply, if determined, and a comparison to the registrant’s current accounting policies. Also, a registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The amendments in this Update are effective immediately.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is a U.S. Securities and Exchange Commission (“SEC”) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021.

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). The amendments in this Update clarify what constitutes a financial asset within the scope of Subtopic 610-20. The amendments also clarify that entities should identify each distinct nonfinancial asset or in substance nonfinancial asset that is promised to a counterparty and to derecognize each asset when the counterparty obtains control. There is also additional guidance provided for partial sales of a nonfinancial asset and when derecognition, and the related gain or loss, should be recognized. The amendments in this Update are effective at the same time as the amendments in Update 2014-09. Therefore, for public entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. For all other entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position on results of operation.

In February 2017, the FASB issued ASU 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965). This Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust, which is a trust for which a regulated financial institution serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. For each master trust in which a plan holds an interest, the amendments in this Update require a plan's interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. The amendments in this Update remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments, which supplements the existing requirement to disclose the master trusts balances in each general type of investments. There are also increased disclosure requirements for investments in master trusts. The amendments in this Update are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715). The amendments in this Update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20). The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

XML

EARNINGS PER SHARE (Tables)

6 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per share

	Three Months Ended March 31,
	2017						2016
	Basic			Diluted			Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net (loss) income	$	(2,140	)	$	(2,140	)	$	548	$	548
Weighted average shares outstanding		8,639,908			8,639,908			7,380,880		7,380,880
Effect of common stock equivalents		-			-			-		270,973
Adjusted weighted average shares used in earnings per share computation		8,639,908			8,639,908			7,380,880		7,651,853
Earnings (loss) per share - basic and diluted	$	(0.27	)	$	(0.27	)	$	0.07	$	0.07
	Six Months Ended March 31,
	2017						2016
	Basic			Diluted			Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net (loss) income	$	(1,409	)	$	(1,409	)	$	961	$	961
Weighted average shares outstanding		7,979,541			7,979,541			7,498,933		7,498,933
Effect of common stock equivalents		-			-			-		246,791
Adjusted weighted average shares used in earnings per share computation		7,979,541			7,979,541			7,498,933		7,745,724
Earnings (loss) per share - basic and diluted	$	(0.18	)	$	(0.18	)	$	0.13	$	0.12

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Mar. 31, 2017

Accumulated Other Comprehensive Income [Abstract]

Schedule of changes in accumulated other comprehensive income

	Three Months Ended March 31,
	2017			2016
	(Dollars in Thousands)
	Unrealized gains (losses)
	on available for sale			Unrealized gains (losses)
	securities and interest			on available for sale
	rate swaps (a)			securities (a)
Beginning Balance	$	(997	)	$	(764	)
Unrealized (loss) gains on available for sale securities		(362	)		1,547
Unrealized gains on interest rate swaps.		39			-
Total other comprehensive (loss) income		(323	)		1,547
Ending Balance	$	(1,320	)	$	783

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

	Six Months Ended March 31,
	2017			2016
	(Dollars in Thousands)
	Unrealized gains (losses)
	on available for sale			Unrealized gains (losses)
	securities and interest			on available for sale
	rate swaps (a)			securities (a)
Beginning Balance	$	798		$	18
Unrealized (loss) gains on available for sale securities		(2,641	)		765
Unrealized gains on interest rate swaps.		523			-
Total other comprehensive income (loss)		(2,118	)		765
Ending Balance	$	(1,320	)	$	783

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES (Tables)

6 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and fair value of securities, with gross unrealized gains and losses

	March 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	20,988	$	-	$	(493	)	$	20,495
Mortgage-backed securities - U.S. government agencies		134,529		161		(1,898	)		132,792
Corporate bonds		37,093		82		(420	)		36,755
Total debt securities available for sale		192,610		243		(2,811	)		190,042
FHLMC preferred stock		26		40		-			66
Total securities available for sale	$	192,636	$	283	$	(2,811	)	$	190,108
Securities Held to Maturity:
U.S. government and agency obligations	$	29,500	$	122	$	(1,856	)	$	27,766
Mortgage-backed securities - U.S. government agencies		5,906		325		(37	)		6,194
Municipal bonds		22,791		150		(361	)		22,580
Total securities held to maturity	$	58,197	$	597	$	(2,254	)	$	56,540

	September 30, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	20,988	$	36	$	-		$	21,024
Mortgage-backed securities - U.S. government agencies		90,817		860		(102	)		91,575
Corporate bonds		25,411		661		(19	)		26,053
Total debt securities available for sale		137,216		1,557		(121	)		138,652
FHLMC preferred stock		6		36		-			42
Total securities available for sale	$	137,222	$	1,593	$	(121	)	$	138,694
Securities Held to Maturity:
U.S. government and agency obligations	$	33,499	$	399	$	(129	)	$	33,769
Mortgage-backed securities - U.S. government agencies		6,472		459		-			6,931
Total securities held to maturity	$	39,971	$	858	$	(129	)	$	40,700

Schedule of gross unrealized losses and related fair values of investment securities

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(493	)	$	20,528	$	-		$	-	$	(493	)	$	20,528
Mortgage-backed securities - agency		(1,730	)		86,840		(168	)		7,251		(1,898	)		94,091
Corporate bonds		(420	)		22,498		-			-		(420	)		22,498
Total securities available for sale	$	(2,643	)	$	129,866	$	(168	)	$	7,251	$	(2,811	)	$	137,117
Securities Held to Maturity:
U.S. government and agency obligations	$	(1,856	)	$	32,499	$	-		$	-	$	(1,856	)	$	32,499
Mortgage-backed securities - agency		(37	)		1,267		-			-		(37	)		1,267
Municipal bonds		(361	)		17,044		-			-		(361	)		17,044
Total securities held to maturity	$	(2,254	)	$	50,810	$	-		$	-	$	(2,254	)	$	50,810
Total	$	(4,897	)	$	180,676	$	(168	)	$	7,251	$	(5,065	)	$	187,927

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
Mortgage-backed securities - agency	$	(50	)	$	16,498	$	(52	)	$	6,718	$	(102	)	$	23,216
Corporate bonds		(19	)		3,955		-			-		(19	)		3,955
Total securities available for sale	$	(69	)	$	20,453	$	(52	)	$	6,718	$	(121	)	$	27,171
Securities Held to Maturity:
U.S. government and agency obligations	$	(129	)	$	20,371	$	-		$	-	$	(129	)	$	20,371
Total securities held to maturity	$	(129	)	$	20,371	$	-		$	-	$	(129	)	$	20,371
Total	$	(198	)	$	40,824	$	(52	)	$	6,718	$	(250	)	$	47,542

Schedule of amortized cost and fair value of debt securities by contractual maturity

	March 31, 2017
	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in Thousands)
Due after one through five years	$	2,868	$	2,995	$	4,051	$	4,054
Due after five through ten years		20,603		20,228		33,042		32,702
Due after ten years		28,820		27,123		20,988		20,494
Total	$	52,291	$	50,346	$	58,081	$	57,250

XML

LOANS RECEIVABLE (Tables)

6 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Schedule of summary of loans receivable

	March 31,			September 30,
	2017			2016
	(Dollars in Thousands)
One-to-four family residential	$	365,425		$	233,531
Multi-family residential		13,710			12,478
Commercial real estate		95,853			79,859
Construction and land development		86,164			21,839
Commercial business		-			99
Leases		5,491			3,286
Consumer		7,442			799
Total loans		574,085			351,891
Undisbursed portion of loans-in-process		(45,173	)		(5,371	)
Deferred loan fees and (costs)		(3,131	)		1,697
Allowance for loan losses		(3,896	)		(3,269	)
Net loans	$	521,885		$	344,948

Schedule of loans individually and collectively evaluated for impairment by loan segment

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Leases		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,350		122		862		1,035		28		135		364		3,896
Total ending allowance balance	$	1,350	$	122	$	862	$	1,035	$	28	$	135	$	364	$	3,896
Loans:
Individually evaluated for impairment	$	5,031	$	330	$	2,881	$	8,703	$	-	$	-			$	16,945
Collectively evaluated for impairment		360,394		13,380		92,972		77,461		5,491		7,442				557,140
Total loans	$	365,425	$	13,710	$	95,853	$	86,164	$	5,491	$	7,442			$	574,085

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Commercial business		Leases		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,627		137		859		316		1		21		10		298		3,269
Total ending allowance balance	$	1,627	$	137	$	859	$	316	$	1	$	21	$	10	$	298	$	3,269
Loans:
Individually evaluated for impairment	$	5,553	$	335	$	3,154	$	10,288	$	99	$	-	$	-			$	19,429
Collectively evaluated for impairment		227,978		12,143		76,705		11,551		-		3,286		799				332,462
Total loans	$	233,531	$	12,478	$	79,859	$	21,839	$	99	$	3,286	$	799			$	351,891

Schedule of impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	5,031	$	5,031	$	5,394
Multi-family residential		-		-		330		330		330
Commercial real estate		-		-		2,881		2,881		2,881
Construction and land development		-		-		8,703		8,703		10,522
Total loans	$	-	$	-	$	16,945	$	16,945	$	19,127

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	5,553	$	5,553	$	5,869
Multi-family		-		-		335		335		335
Commercial real estate		-		-		3,154		3,154		3,154
Construction and land development		-		-		10,288		10,288		10,288
Commercial loans		-		-		99		99		99
Total loans	$	-	$	-	$	19,429	$	19,429	$	19,745

Schedule of average investment in impaired loans and related interest income recognized

	Three Months Ended March 31, 2017
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	6,086	$	32	$	33
Multi-family residential		330		6		-
Commercial real estate		2,801		17		-
Construction and land development		9,607		-		-
Total loans	$	18,824	$	55	$	33
	Three Months Ended March 31, 2016
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	5,069	$	20	$	29
Multi-family residential		345		-		-
Commercial real estate		3,703		27		-
Construction and land development		9,410		126		-
Total loans	$	18,527	$	173	$	29
	Six Months Ended March 31, 2017
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	5,909	$	49	$	58
Multi-family residential		332		12		-
Commercial real estate		2,919		35		12
Construction and land development		9,834		-		-
Total loans	$	18,994	$	96	$	70

	Six Months Ended March 31, 2016
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	4,781	$	43	$	59
Multi-family residential		348		-		-
Commercial real estate		3,725		42		12
Construction and land development		9,206		252		64
Total loans	$	18,060	$	337	$	135

Schedule of classes of the loan portfolio in which a formal risk weighting system is utilized

	March 31, 2017
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	-	$	1,657	$	574	$	2,231
Multi-family residential		13,710		-		-		13,710
Commercial real estate		92,208		1,469		2,176		95,853
Construction and land development		77,461		-		8,703		86,164
Total loans	$	183,379	$	3,126	$	11,453	$	197,958

	September 30, 2016
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	-	$	1,681	$	1,212	$	2,893
Multi-family residential		12,144		-		334		12,478
Commercial real estate		76,185		943		2,731		79,859
Construction and land development		11,551		-		10,288		21,839
Commercial business		99		-		-		99
Total loans	$	99,979	$	2,624	$	14,565	$	117,168

Schedule of loans in which a formal risk rating system is not utilized, but loans are segregated between performing and non-performing

	March 31, 2017
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	356,816	$	6,378	$	363,194
Leases		5,491		-		5,491
Consumer		7,442		-		7,442
Total loans	$	369,749	$	6,378	$	376,127
	September 30, 2016
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	226,394	$	4,244	$	230,638
Leases		3,286		-		3,286
Consumer		799		-		799
Total loans	$	230,479	$	4,244	$	234,723

Schedule of loan categories of the loan portfolio summarized by the aging categories of performing and delinquent loans and nonaccrual loans

	March 31, 2017
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	361,265	$	1,034	$	3,126	$	-	$	1,034	$	365,425	$	6,378
Multi-family residential		13,710		-		-		-		-		13,710		-
Commercial real estate		94,247		260		1,346		-		260		95,853		1,346
Construction and land development		77,469		-		8,695		-		-		86,164		8,695
Leases		5,402		89		-		-		89		5,491		-
Consumer		7,436		6		-		-		6		7,442		-
Total loans	$	559,529	$	1,389	$	13,167	$	-	$	1,389	$	574,085	$	16,419
	September 30, 2016
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	228,904	$	1,860	$	2,767	$	-	$	1,860	$	233,531	$	4,244
Multi-family residential		12,478		-		-		-		-		12,478		-
Commercial real estate		78,513		-		1,346		-		-		79,859		1,346
Construction and land development		11,551		-		10,288		-		-		21,839		10,288
Commercial business		99		-		-		-		-		99		-
Leases		3,286		-		-		-		-		3,286		-
Consumer		799		-		-		-		-		799		-
Total loans	$	335,630	$	1,860	$	14,401	$	-	$	1,860	$	351,891	$	15,878

Schedule of primary segments of the allowance for loan losses, segmented into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment.

	Three Months Ended March 31, 2017
	One- to four-family residential			Multi- family residential			Commercial real estate			Construction and land development			Leases		Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at December 31, 2016	$	1,564		$	135		$	963		$	415		$	28	$	35		$	314	$	3,454
Charge-offs		(113	)		-			-			(1,819	)		-		(16	)		-		(1,948	)
Recoveries		25			-			-			-			-		-			-		25
Provision		(126	)		(13	)		(101	)		2,439			-		116			50		2,365
ALLL balance at March 31, 2017	$	1,350		$	122		$	862		$	1,035		$	28	$	135		$	364	$	3,896

	Six Months Ended March  31, 2017
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Commercial business			Leases		Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2016	$	1,627		$	137		$	859	$	316		$	1		$	21	$	10		$	298	$	3,269
Charge-offs		(113	)		-			-		(1,819	)		-			-		(16	)		-		(1,948	)
Recoveries		25			-			-		-			-			-		-			-		25
Provision		(189	)		(15	)		3		2,538			(1	)		7		141			66		2,550
ALLL balance at March 31, 2017	$	1,350		$	122		$	862	$	1,035		$	-		$	28	$	135		$	364	$	3,896

	Three Months Ended March 31, 2016
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at December 31, 2016	$	1,471		$	58		$	359	$	757		$	8		$	266	$	2,919
Charge-offs		-			-			-		-			-			-		-
Recoveries		-			-			-		44			-			-		44
Provision		40			(15	)		69		(28	)		(1	)		10		75
ALLL balance at March 31, 2016	$	1,511		$	43		$	428	$	773		$	7		$	276	$	3,038
	Six Months Ended March  31, 2016
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development			Consumer			Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2015	$	1,635		$	66		$	231	$	724		$	5		$	269	$	2,930
Charge-offs		(11	)		-			-		-			-			-		(11	)
Recoveries		-			-			-		44			-			-		44
Provision		(113	)		(23	)		197		5			2			7		75
ALLL balance at March 31, 2016	$	1,511		$	43		$	428	$	773		$	7		$	276	$	3,038

XML

DEPOSITS (Tables)

6 Months Ended

Mar. 31, 2017

Deposits [Abstract]

Schedule of major classifications of deposits

	March 31,					September 30,
	2017					2016
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Money market deposit accounts	$	87,107		14.6	%	$	55,552		14.3	%
Interest-bearing checking accounts		54,763		9.2			34,984		9.3
Non interest-bearing checking accounts		9,272		1.6			3,804		0.7
Passbook, club and statement savings		107,335		18.0			70,924		18.2
Certificates maturing in six months or less		125,124		21.0			97,418		25.0
Certificates maturing in more than six months		211,509		35.6			126,519		32.5
Total	$	595,110		100.0	%	$	389,201		100.0	%

XML

ADVANCES FROM FEDERAL HOME LOAN BANK (Tables)

6 Months Ended

Mar. 31, 2017

Advances from Federal Home Loan Banks [Abstract]

Schedule of short-term borrowings from the FHLB

	Three Months			Six Months
	Ended			Ended
(Dollar amount in thousands)	March 31, 2016			March 31, 2016
Balance at quarter-end	$	27,000		$	27,000
Average balance outstanding		27,000			23,500
Maximum month-end balance		27,000			27,000
Weight-average rate at period end		1.00	%		1.00	%
Weight-average rate during the period		1.00	%		1.00	%

Schedule of collateral agreement with the FHLB

Type	Maturity Date	Amount		Coupon			Call Date
		(dollars in thousands)
Fixed Rate -Advance	17-Nov-17		10,000		1.21	%	Not Applicable
Fixed Rate -Amortizing	1-Dec-17		1,511		1.16	%	Not Applicable
Fixed Rate -Advance	4-Dec-17		2,000		1.15	%	Not Applicable
Fixed Rate -Advance	19-Mar-18		4,939		2.53	%	Not Applicable
Fixed Rate -Advance	19-Mar-18		4,959		2.13	%	Not Applicable
Fixed Rate -Advance	20-Jun-18		2,981		1.86	%	Not Applicable
Fixed Rate -Advance	25-Jun-18		2,973		2.09	%	Not Applicable
Fixed Rate -Advance	27-Aug-18		6,729		4.15	%	Not Applicable
Fixed Rate -Advance	15-Nov-18		2,980		1.89	%	Not Applicable
Fixed Rate -Advance	16-Nov-18		7,500		1.40	%	Not Applicable
Fixed Rate -Advance	26-Nov-18		1,989		2.35	%	Not Applicable
Fixed Rate -Advance	3-Dec-18		3,000		1.54	%	Not Applicable
Fixed Rate -Advance	16-Aug-19		2,929		2.66	%	Not Applicable
Fixed Rate -Advance	9-Oct-19		1,958		2.54	%	Not Applicable
Fixed Rate -Amortizing	18-Nov-19		4,098		1.53	%	Not Applicable
Fixed Rate -Advance	26-Nov-19		2,949		1.81	%	Not Applicable
Fixed Rate -Advance	22-Jun-20		2,927		2.64	%	Not Applicable
Fixed Rate -Advance	24-Jun-20		1,936		2.85	%	Not Applicable
Fixed Rate -Advance	27-Jul-20		2,049		1.38	%	Not Applicable
Fixed Rate -Advance	17-Aug-20		1,921		3.06	%	Not Applicable
Fixed Rate -Advance	9-Oct-20		1,929		2.92	%	Not Applicable
Fixed Rate -Advance	27-Jul-21		249		1.52	%	Not Applicable
Fixed Rate -Advance	28-Jul-21		249		1.48	%	Not Applicable
Fixed Rate -Advance	28-Jul-21		249		1.42	%	Not Applicable
Fixed Rate -Advance	19-Aug-21		249		1.55	%	Not Applicable
Fixed Rate -Advance	7-Oct-21		1,899		3.19	%	Not Applicable
Fixed Rate -Advance	12-Oct-21		1,905		3.23	%	Not Applicable
		$	79,057		2.15	%	(a)
(a) Weighted average coupon rate.

XML

DERIVATIVES (Tables)

6 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of interest rate swap agreements and the terms

	March 31, 2017
	Notional		Pay			Receive	Maturity	Unrealized
	Amount		Rate			Rate	Date	Gain
						(dollar in thousands)
Interest rate swap contract	$	10,000		1.15	%	1 Month Libor	6-Apr-21	$	250
Interest rate swap contract		10,000		1.18	%	1 Month Libor	13-Jun-21		260
Interest rate swap contract		1,100		4.10	%	1 Month Libor +276 bp	1-Aug-26		72
								$	582

	September 30, 2016
	Notinal		Pay			Receive	Maturity	Unrealized
	Amount		Rate			Rate	Date	Loss
						(dollar in thousands)
Interest rate swap contract	$	10,000		1.15	%	1 Mth Libor	6-Apr-21	$	(92	)
Interest rate swap contract		10,000		1.18	%	1 Mth Libor	13-Jun-21		(103	)
Interest rate swap contract		1,100		4.10	%	1 Mth Libor +276 bp	1-Aug-26		(7	)
								$	(202	)

XML

INCOME TAXES (Tables)

6 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Schedule of deferred income taxes

	March 31,			September 30,
	2017			2016
Deferred tax assets:	(Dollars in Thousands)
Allowance for loan losses	$	1,593		$	1,289
Nonaccrual interest		292			163
Accrued vacation		12			13
Capital loss carryforward		378			378
Split dollar life insurance		18			18
Post-retirement benefits		93			96
Unrealized losses on available for sale securities		860			-
Goodwill		2,042			-
Unrealized losses on interest rate swaps		-			69
Employee benefit plans		382			434
Total deferred tax assets		5,670			2,460
Valuation allowance		(378	)		(378	)
Total deferred tax assets, net of valuation allowance		5,292			2,082
Deferred tax liabilities:
Property		423			423
Unrealized gains on available for sale securities		-			500
Unrealized gains on interest rate swaps		198			-
Miscellaneous		12			12
Deferred loan fees		455			578
Total deferred tax liabilities		1,088			1,513
Net deferred tax assets	$	4,204		$	569

XML

STOCK COMPENSATION PLANS (Tables)

6 Months Ended

Mar. 31, 2017

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of summary of the non-vested stock award activity

	Six Months Ended  March 31, 2017
	Number of Shares (1)			Weighted Average  Grant Date Fair  Value
Nonvested stock awards at October 1, 2016		172,788		$	12.03
Granted		17,128			17.43
Forfeited		-			-
Vested		(43,018	)		11.61
Nonvested stock awards at the March 31, 2017		146,898		$	12.78
	Six Months Ended  March 31, 2016
	Number of  Shares			Weighted Average  Grant Date Fair  Value
Nonvested stock awards at October 1, 2015		241,428		$	11.74
Granted		-			-
Forfeited		(36,762	)		11.55
Vested		(49,511	)		11.47
Nonvested stock awards at the March 31, 2016		155,155		$	11.87

Schedule of summary of the status of the company' stock options under the stock option plan

	Six Months Ended  March 31, 2017
	Number of  Shares			Weighted Average  Exercise Price
Outstanding at October 1, 2016		921,909		$	11.70
Granted		22,828			11.43
Exercised		(32,224	)		11.50
Forfeited		-			-
Outstanding at  March 31, 2017		912,513		$	11.85
Exercisable at March 31, 2017		579,078		$	11.43
	Six Months Ended  March 31, 2016
	Number of  Shares			Weighted Average  Exercise Price
Outstanding at October 1, 2015		1,074,430		$	11.92
Granted		-			-
Exercised		(130,535	)		11.49
Forfeited		(93,939	)		11.55
Outstanding at March 31, 2016		849,956		$	12.03
Exercisable at March 31, 2016		347,037		$	11.38

XML

FAIR VALUE MEASUREMENT (Tables)

6 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Schedule of assets measured at fair value on recurring basis

Those assets as of March 31, 2017 which are to be measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	20,945	$	-	$	20,945
Mortgage-backed securities - U.S. Government agencies		-		132,792		-		132,792
Corporate bonds		-		36,755		-		36,755
FHLMC preferred stock		66		-		-		66
Interest rate swap contracts		-		582		-		582
Total	$	66	$	190,624	$	-	$	190,690

Those assets as of September 30, 2016 which are measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	21,024	$	-	$	21,024
Mortgage-backed securities - U.S. Government agencies		-		91,575		-		91,575
Corporate bonds		-		26,053		-		26,053
FHLMC preferred stock		42		-		-		42
Total	$	42	$	138,652	$	-	$	138,694
Liabilities:
Interest rate swap contracts	$	-	$	202	$	-	$	202
Total	$	-	$	202	$	-	$	202

Schedule of summary of non-recurring fair value measurements

	At March 31, 2017
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	16,945	$	16,945
Real estate owned		-		-		192		192
Total	$	-	$	-	$	17,137	$	17,137
	At September 30, 2016
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	19,429	$	19,429
Real estate owned		-		-		581		581
Total	$	-	$	-	$	20,010	$	20,010

Schedule of nonrecurring fair value measurements categorized within level 3 of the fair value hierarchy

	At March 31, 2017
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	16,945	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	6% to 46% discount/ 10%
Real estate owned	$	192	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

	At September 30, 2016
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	19,429	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	6% to 46% discount/10%
Real estate owned	$	581	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various Level 3 inputs, which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

Schedule of the estimated fair value amounts

					Fair Value Measurements at
					March 31, 2017
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	13,058	$	13,058	$	13,058	$	-	$	-
Certificate of deposits		1,853		1,853		1,853		-		-
Investment and mortgage-backed securities available for sale		190,108		190,108		66		190,042		-
Investment and mortgage-backed securities held to maturity		58,197		56,540		-		56,540		-
Loans receivable, net		521,885		524,148		-		-		524,148
Accrued interest receivable		2,626		2,626		2,626		-		-
Other real estate owned		192		192		192		-		-
Federal Home Loan Bank stock		5,699		5,699		5,699		-		-
Bank owned life insurance		27,709		27,709		27,709		-		-
Interest rate swap contracts		582		582		-		582		-
Liabilities:
Checking accounts		64,035		64,035		64,035		-		-
Money market deposit accounts		87,107		87,107		87,107		-		-
Passbook, club and statement savings accounts		107,335		107,335		107,335		-		-
Certificates of deposit		336,633		338,846		-		-		338,846
Advances from FHLB short-term		27,000		27,000		27,000				-
Advances from FHLB long-term		79,057		78,271		-		-		78,271
Accrued interest payable		790		790		790		-		-
Advances from borrowers for taxes and insurance		2,789		2,789		2,789		-		-

					Fair Value Measurements at
					September 30, 2016
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	12,440	$	12,440	$	12,440	$	-	$	-
Certificate of deposits		1,853		1,853		1,853		-		-
Investment and mortgage-backed securities available for sale		138,694		138,694		42		138,652		-
Investment and mortgage-backed securities held to maturity		39,971		40,700		-		40,700		-
Loans receivable, net		344,948		344,100		-		-		344,100
Accrued interest receivable		1,928		1,928		1,928		-		-
Federal Home Loan Bank stock		2,463		2,463		2,463		-		-
Bank owned life insurance		13,055		13,055		13,055		-		-
Liabilities:
Checking accounts		38,788		38,788		38,788		-		-
Money market deposit accounts		55,552		55,552		55,552		-		-
Passbook, club and statement savings accounts		70,924		70,924		70,924		-		-
Certificates of deposit		223,937		225,383		-		-		225,383
Accrued interest payable		1,403		1,403		1,403		-		-
Advances from FHLB -short-term		20,000		20,000		20,000		-		-
Advances from FHLB -long-term		30,638		30,222		-		-		30,222
Advances from borrowers for taxes and insurance		1,748		1,748		1,748		-		-
Interest rate swap contracts		202		202		-		202		-

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

6 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill and intangible assets are related to the acquisition of Polonia

	Balance							Balance
	January 1,		Additions/					March 31,		Amortization
	2017		Adjustments		Amortization			2017		Period
Goodwill	$	-	$	7,163	$	-		$	7,163
Core deposit intangible		-		822		(37	)		785		10 years
	$	-	$	7,985	$	(37	)	$	7,948

Schedule of goodwill and intangible assets are related to the acquisition of Polonia

(in thousands)
2017	$	75
2018		142
2019		127
2020		112
Thereafter		366

XML

BUSINESS COMBINATIONS (Tables)

6 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Schedule of consideration paid and estimated fair value of identifiable assets and liabilities assumed

(dollars in thousands)
Consideration paid:
Common stock issued (1,274,197 shares) at a fair value per share of $17.12 per share.	$	21,814
Cash for common stock exchanged		18,944
Cash in lieu of fractional shares		1
		40,759
Assets acquired:
Cash and due from banks		47,901
Investments available for sale		42,164
Loans		160,157
Premises and equipment		6,902
Deferred taxes		3,921
Bank-owned life insurance		4,316
Core deposit intangible		822
Other assets		5,802
Total assets		271,985
Liabilities assumed:
Deposits		172,243
FHLB advances short-term		7,000
FHLB advances long -term		50,232
Other liabilities		8,914
Total liabilities		238,389
Net assets acquired		33,596
Goodwill resulting from the acquisition	$	7,163

Schedule of estimated fair value of the assets acquired and the liabilities assumed

(dollars in thousands, except per share data)
Purchase Consideration
Polonia Common Stock:
Total Shares of Common Stock Outstanding		3,416,311
Common Stock Issued Cap		1,708,155
Shares Redeemed for Cash Cap		1,708,156
Prudential Common Stock Issued (conversion rate 0.7460)		1,274,197
Prudential Closing Price at December 31, 2016	$	17.12
Cash-out rate paid per share for Polonia Common Stock	$	11.09
Purchase consideration assigned to Polonia shares exchanged for Prudential Common Stock	$	21,814
Cash Paid to Polonia for Polonia shares	$	18,943
Cash Paid for fractional shares	$	1
	$	40,758
Net Assets Acquired
Polonia stockholders' equity		35,412
Core deposit intangible assets		822
Estimated adjustments to reflect assets acquired at fair value:
Investment securities		(781	)
Portfolio loans		(4,643	)
Allowance for loan and lease losses		1,002
Premises		3,049
Other Assets		(74	)
Deferred Taxes		934
Total fair value adjustment to assets acquired		309
Estimated adjustments to reflect liabilities assumed at fair value:
Time deposits		894
Borrowings		1,232
Total fair value adjustment to liabilities assumed		2,126
Total net assets acquired		33,595
Goodwill resulting from merger		7,163

Schedule of Pro Forma Income Statements

	Three Months Ended
	March 31,
(dollars in thousands, except per share data)	2017			2016
Net interest income		5,299			5,534
Provision for loan and leases losses		2,365			75
Net interest income after provision for loan and lease losses		2,934			5,459
Non-interest income		518			530
Non-interest expenses		6,763			5,137
(Loss) income before income taxes		(3,311	)		852
Income tax (benefit) expense		(1,171	)		312
Net (loss) income		(2,140	)		540
Per share data
Weighed average basic shares outstanding		8,639,908			8,655,077
Dilutive shares		-			270,973
Adjusted weighted-average dilutive shares		8,639,908			8,926,050
Basic (loss) earnings per common share	$	0.28		$	0.06
Dilutive (loss) earnings per common share	$	0.28		$	0.06

(a) Weighted-average basis shares outstanding for both periods reflected are the Company’s weighted-average shares plus the 1,274,197, shares that were issued as consideration for the Merger. The dilutive shares reflect the Company’s estimated diluted shares for the period.

	Six Months Ended
	March 31,
(dollars in thousands, except per share data)	2017			2016
Net interest income		8,947			10,387
Provision for loan and leases losses		2,550			75
Net interest income after provision for loan and lease losses		6,397			10,312
Non-interest income		876			941
Non-interest expenses		9,483			10,403
(Loss) income before income taxes		(2,210	)		850
Income tax (benefit) expense		(801	)		(29	)
Net (loss) income		(1,409	)		879
Per share data
Weighed average basic shares outstanding		9,253,738			8,655,077
Dilutive shares		-			246,791
Adjusted weighted-average dilutive shares		9,253,738			8,901,868
Basic (loss) earnings per common share	$	(0.28	)	$	0.10
Dilutive (loss) earnings per common share	$	(0.28	)	$	0.10

(a) Weighted-average basis shares outstanding for both periods reflected are the Company’s weighted-average shares plus the 1,274,197, shares that were issued as consideration for the Merger. The dilutive shares reflect the Company’s estimated diluted shares for the period

XML

SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) $ in Thousands	6 Months Ended
	Mar. 31, 2017 USD ($) Branch shares
Significant Accounting Policies [Line Items]
Number of full service branch offices	10
Number of branch offices	11
Terminate ESOP Plan, value | $	$ 733
Terminate ESOP Plan (in shares) | shares	303,115
Share-based Compensation Arrangement by Share-based Payment Award, Shares Purchased for Award | shares	42,791
Treasury Stock
Significant Accounting Policies [Line Items]
Terminate ESOP Plan, value | $	$ 5,189
Philadelphia (Philadelphia County)
Significant Accounting Policies [Line Items]
Number of branch offices	9
Drexel Hill, Delaware County, Pennsylvania
Significant Accounting Policies [Line Items]
Number of branch offices	1
Huntingdon Valley, Montgomery County
Significant Accounting Policies [Line Items]
Number of branch offices	1

XML

EARNINGS PER SHARE - Calculated basic and diluted earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Earnings per share - basic
Net (loss) income	$ (2,140)	$ 548	$ (1,409)	$ 961
Weighted average shares outstanding - basic	8,639,908	7,380,880	7,979,541	7,498,933
Effect of common stock equivalents - basic
Adjusted weighted average shares used in earnings per share computation - basic	8,639,908	7,380,880	7,979,541	7,498,933
Earnings per share - basic (in dollars per share)	$ (0.27)	$ 0.08	$ (0.18)	$ 0.13
Earnings per share - diluted
Net (loss) income	$ (2,140)	$ 548	$ (1,409)	$ 961
Weighted average shares outstanding - diluted	8,639,908	7,380,880	7,979,541	7,498,933
Effect of common stock equivalents - diluted		270,973		246,791
Adjusted weighted average shares used in earnings per share computation - diluted	8,639,908	7,651,853	7,979,541	7,745,724
Earnings per share - diluted (in dollars per share)	$ (0.27)	$ 0.07	$ (0.18)	$ 0.12

XML

EARNINGS PER SHARE (Detail Textuals) - shares	3 Months Ended	6 Months Ended
	Mar. 31, 2017	Mar. 31, 2017
Earnings Per Share [Abstract]
Exercisable stock options outstanding not included in computation of diluted earnings per share	303,610	341,277

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Changes in accumulated other comprehensive income (loss) by component net of tax (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	[1]			$ 798
Total other comprehensive loss		$ (323)	$ 1,547	(2,118)	$ 765
Ending Balance	[1]	(1,320)		(1,320)
Unrealized gains (losses) on available for sale securities and interest rate swaps
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	[1]	(997)		798
Unrealized (loss) gains on available for sale securities	[1]	(362)		(2,641)
Unrealized gains on interest rate swaps	[1]	39		523
Total other comprehensive loss	[1]	(323)		(2,118)
Ending Balance	[1]	$ (1,320)		$ (1,320)
Unrealized gains (losses) on available for sale securities
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	[1]		(764)		18
Unrealized (loss) gains on available for sale securities	[1]		1,547		765
Unrealized gains on interest rate swaps	[1]
Total other comprehensive loss	[1]		1,547		765
Ending Balance	[1]		$ 783		$ 783

[1] All amounts are net of tax. Amounts in parentheses indicate debits.

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES - Amortized cost and fair value of investment and mortgage-backed securities, with gross unrealized gains and losses (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Securities Available for Sale:
Amortized Cost	$ 192,636	$ 137,222
Gross Unrealized Gains	283	1,593
Gross Unrealized Losses	(2,811)	(121)
Fair Value	190,108	138,694
Securities Held to Maturity:
Amortized Cost	58,197	39,971
Gross Unrealized Gains	597	858
Gross unrealized losses	(2,254)	(129)
Fair value	56,540	40,700
U.S. government and agency obligations
Securities Available for Sale:
Amortized Cost	20,988	20,988
Gross Unrealized Gains		36
Gross Unrealized Losses	(493)
Fair Value	20,495	21,024
Securities Held to Maturity:
Amortized Cost	29,500	33,499
Gross Unrealized Gains	122	399
Gross unrealized losses	(1,856)	(129)
Fair value	27,766	33,769
Mortgage-backed securities - US government agencies
Securities Available for Sale:
Amortized Cost	134,529	90,817
Gross Unrealized Gains	161	860
Gross Unrealized Losses	(1,898)	(102)
Fair Value	132,792	91,575
Securities Held to Maturity:
Amortized Cost	5,906	6,472
Gross Unrealized Gains	325	459
Gross unrealized losses	(37)
Fair value	6,194	6,931
Corporate bonds
Securities Available for Sale:
Amortized Cost	37,093	25,411
Gross Unrealized Gains	82	661
Gross Unrealized Losses	(420)	(19)
Fair Value	36,755	26,053
Total debt securities available for sale
Securities Available for Sale:
Amortized Cost	192,610	137,216
Gross Unrealized Gains	243	1,557
Gross Unrealized Losses	(2,811)	(121)
Fair Value	190,042	138,652
FHLMC preferred stock
Securities Available for Sale:
Amortized Cost	26	6
Gross Unrealized Gains	40	36
Gross Unrealized Losses
Fair Value	66	$ 42
Municipal bonds
Securities Held to Maturity:
Amortized Cost	22,791
Gross Unrealized Gains	150
Gross unrealized losses	(361)
Fair value	$ 22,580

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES - Gross unrealized losses and related fair values of investment securities, aggregated by investment category and length of time (Details 1) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Securities Available for Sale:
Less than 12 months - Gross Unrealized Losses	$ (2,643)	$ (69)
Less than 12 months - Fair value	129,866	20,453
More than 12 months - Gross Unrealized Losses	(168)	(52)
More than 12 months - Fair value	7,251	6,718
Gross Unrealized Losses - Total	(2,811)	(121)
Fair Value - Total	137,117	27,171
Securities Held to Maturity:
Less than 12 months - Gross Unrealized Losses	(2,254)	(129)
Less than 12 months - Fair value	50,810	20,371
More than 12 months - Gross Unrealized Losses
More than 12 months - Fair value
Gross Unrealized Losses -Total	(2,254)	(129)
Fair Value - Total	50,810	20,371
Less than 12 months - Gross Unrealized Losses	(4,897)	(198)
Less than 12 months - Fair Value	180,676	40,824
More than 12 months - Gross Unrealized Losses	(168)	(52)
More than 12 months - Fair Value	7,251	6,718
Gross Unrealized Losses -Total	(5,065)	(250)
Fair Value - Total	187,927	47,542
U.S. government and agency obligations
Securities Available for Sale:
Less than 12 months - Gross Unrealized Losses	(493)
Less than 12 months - Fair value	20,528
More than 12 months - Gross Unrealized Losses
More than 12 months - Fair value
Gross Unrealized Losses - Total	(493)
Fair Value - Total	20,528
Securities Held to Maturity:
Less than 12 months - Gross Unrealized Losses	(1,856)	(129)
Less than 12 months - Fair value	32,499	20,371
More than 12 months - Gross Unrealized Losses
More than 12 months - Fair value
Gross Unrealized Losses -Total	(1,856)	(129)
Fair Value - Total	32,499	20,371
Mortgage-backed securities - US government agencies
Securities Available for Sale:
Less than 12 months - Gross Unrealized Losses	(1,730)	(50)
Less than 12 months - Fair value	86,840	16,498
More than 12 months - Gross Unrealized Losses	(168)	(52)
More than 12 months - Fair value	7,251	6,718
Gross Unrealized Losses - Total	(1,898)	(102)
Fair Value - Total	94,091	23,216
Securities Held to Maturity:
Less than 12 months - Gross Unrealized Losses	(37)
Less than 12 months - Fair value	1,267
More than 12 months - Gross Unrealized Losses
More than 12 months - Fair value
Gross Unrealized Losses -Total	(37)
Fair Value - Total	1,267
Corporate bonds
Securities Available for Sale:
Less than 12 months - Gross Unrealized Losses	(420)	(19)
Less than 12 months - Fair value	22,498	3,955
More than 12 months - Gross Unrealized Losses
More than 12 months - Fair value
Gross Unrealized Losses - Total	(420)	(19)
Fair Value - Total	22,498	$ 3,955
Municipal bonds
Securities Held to Maturity:
Less than 12 months - Gross Unrealized Losses	(361)
Less than 12 months - Fair value	17,044
More than 12 months - Gross Unrealized Losses
More than 12 months - Fair value
Gross Unrealized Losses -Total	(361)
Fair Value - Total	$ 17,044

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES - Amortized cost and fair value of debt securities, by contractual maturity (Details 2) $ in Thousands	Mar. 31, 2017 USD ($)
Held to Maturity, Amortized Cost
Due after one through five years	$ 2,868
Due after five through ten years	20,603
Due after ten years	28,820
Total	52,291
Held to Maturity, Fair Value
Due after one through five years	2,995
Due after five through ten years	20,228
Due after ten years	27,123
Total	50,346
Available for Sale, Amortized Cost
Due after one through five years	4,051
Due after five through ten years	33,042
Due after ten years	20,988
Total	58,081
Available for Sale, Fair Value
Due after one through five years	4,054
Due after five through ten years	32,702
Due after ten years	20,494
Total	$ 57,250

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES (Detail Textuals)	Mar. 31, 2017 Security
U.S. Government and agency obligations
Marketable Securities [Line Items]
Number of investment securities in debt obligations in the category of loss position less than 12 months held by company	14
Mortgage-backed securities - US government agencies
Marketable Securities [Line Items]
Number of investment securities in debt obligations in the category of loss position less than 12 months held by company	39
Number of investment securities in debt obligations in the category of loss position more than 12 months held by company	6
Corporate bonds
Marketable Securities [Line Items]
Number of investment securities in debt obligations in the category of loss position less than 12 months held by company	16
Municipal bonds
Marketable Securities [Line Items]
Number of investment securities in debt obligations in the category of loss position less than 12 months held by company	9

XML

LOANS RECEIVABLE - Summary of Loans receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 574,085		$ 351,891
Undisbursed portion of loans-in-process	(45,173)		(5,371)
Deferred loan fees and (costs)	(3,131)		1,697
Allowance for loan losses	(3,896)	$ (3,454)	(3,269)	$ (3,038)	$ (2,919)	$ (2,930)
Net loans	521,885		344,948
One-to-four family residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	365,425		233,531
Allowance for loan losses	(1,350)	(1,564)	(1,627)	(1,511)	(1,471)	(1,635)
Multi-family residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	13,710		12,478
Allowance for loan losses	(122)	(135)	(137)	(43)	(58)	(66)
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	95,853		79,859
Allowance for loan losses	(862)	(963)	(859)	(428)	(359)	(231)
Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	86,164		21,839
Allowance for loan losses	(1,035)	(415)	(316)	(773)	(757)	(724)
Commercial business
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans			99
Allowance for loan losses			(1)
Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	5,491		3,286
Allowance for loan losses	(28)	(28)	(21)
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	7,442		799
Allowance for loan losses	$ (135)	$ (35)	$ (10)	$ (7)	$ (8)	$ (5)

XML

LOANS RECEIVABLE - Summary of loans individually evaluated for impairment by loan segment (Details 1) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment	3,896		3,269
Total ending allowance balance	3,896	$ 3,454	3,269	$ 3,038	$ 2,919	$ 2,930
Loans:
Individually evaluated for impairment	16,945		19,429
Collectively evaluated for impairment	557,140		332,462
Total loans	574,085		351,891
One-to-four family residential
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment	1,350		1,627
Total ending allowance balance	1,350	1,564	1,627	1,511	1,471	1,635
Loans:
Individually evaluated for impairment	5,031		5,553
Collectively evaluated for impairment	360,394		227,978
Total loans	365,425		233,531
Multi-family residential
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment	122		137
Total ending allowance balance	122	135	137	43	58	66
Loans:
Individually evaluated for impairment	330		335
Collectively evaluated for impairment	13,380		12,143
Total loans	13,710		12,478
Commercial real estate
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment	862		859
Total ending allowance balance	862	963	859	428	359	231
Loans:
Individually evaluated for impairment	2,881		3,154
Collectively evaluated for impairment	92,972		76,705
Total loans	95,853		79,859
Construction and land development
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment	1,035		316
Total ending allowance balance	1,035	415	316	773	757	724
Loans:
Individually evaluated for impairment	8,703		10,288
Collectively evaluated for impairment	77,461		11,551
Total loans	86,164		21,839
Commercial business
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment			1
Total ending allowance balance			1
Loans:
Individually evaluated for impairment			99
Collectively evaluated for impairment
Total loans			99
Leases
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment	28		21
Total ending allowance balance	28	28	21
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment	5,491		3,286
Total loans	5,491		3,286
Consumer
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment	135		10
Total ending allowance balance	135	35	10	7	8	5
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment	7,442		799
Total loans	7,442		799
Unallocated
Allowance for Loan Losses:
Individually evaluated for impairment
Collectively evaluated for impairment	364		298
Total ending allowance balance	$ 364	$ 314	$ 298	$ 276	$ 266	$ 269

XML

LOANS RECEIVABLE - Impaired loans by class, segregated by those for which specific allowance was required and those for which specific allowance was not required (Details 2) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	16,945	19,429
Total Impaired Loans - Recorded Investment	16,945	19,429
Total impaired loans - Unpaid Principal Balance	19,127	19,745
One-to-four family residential
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	5,031	5,553
Total Impaired Loans - Recorded Investment	5,031	5,553
Total impaired loans - Unpaid Principal Balance	5,394	5,869
Multi-family residential
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	330	335
Total Impaired Loans - Recorded Investment	330	335
Total impaired loans - Unpaid Principal Balance	330	335
Commercial real estate
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	2,881	3,154
Total Impaired Loans - Recorded Investment	2,881	3,154
Total impaired loans - Unpaid Principal Balance	2,881	3,154
Construction and land development
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	8,703	10,288
Total Impaired Loans - Recorded Investment	8,703	10,288
Total impaired loans - Unpaid Principal Balance	$ 10,522	10,288
Commercial loans
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment		99
Total Impaired Loans - Recorded Investment		99
Total impaired loans - Unpaid Principal Balance		$ 99

XML

LOANS RECEIVABLE - Average recorded investment in impaired loans and related interest income recognized (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	$ 18,824	$ 18,527	$ 18,994	$ 18,060
Income Recognized on Accrual Basis	55	173	96	337
Income Recognized on Cash Basis	33	29	70	135
One-to-four family residential
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	6,086	5,069	5,909	4,781
Income Recognized on Accrual Basis	32	20	49	43
Income Recognized on Cash Basis	33	29	58	59
Multi-family residential
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	330	345	332	348
Income Recognized on Accrual Basis	6		12
Income Recognized on Cash Basis
Commercial real estate
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	2,801	3,703	2,919	3,725
Income Recognized on Accrual Basis	17	27	35	42
Income Recognized on Cash Basis			12	12
Construction and land development
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	9,607	9,410	9,834	9,206
Income Recognized on Accrual Basis		126		252
Income Recognized on Cash Basis				$ 64

XML

LOANS RECEIVABLE - Summary of classes of loan portfolio in which formal risk weighting system is used (Details 4) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 574,085	$ 351,891
One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	365,425	233,531
Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	13,710	12,478
Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	95,853	79,859
Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	86,164	21,839
Commercial business
Financing Receivable, Recorded Investment [Line Items]
Total Loans		99
Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,442	799
Risk Rating System
Financing Receivable, Recorded Investment [Line Items]
Total Loans	197,958	117,168
Risk Rating System | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,231	2,893
Risk Rating System | Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	13,710	12,478
Risk Rating System | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	95,853	79,859
Risk Rating System | Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	86,164	21,839
Risk Rating System | Commercial business
Financing Receivable, Recorded Investment [Line Items]
Total Loans		99
Risk Rating System | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	183,379	99,979
Risk Rating System | Pass | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Risk Rating System | Pass | Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	13,710	12,144
Risk Rating System | Pass | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	92,208	76,185
Risk Rating System | Pass | Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	77,461	11,551
Risk Rating System | Pass | Commercial business
Financing Receivable, Recorded Investment [Line Items]
Total Loans		99
Risk Rating System | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,126	2,624
Risk Rating System | Special Mention | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,657	1,681
Risk Rating System | Special Mention | Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Risk Rating System | Special Mention | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,469	943
Risk Rating System | Special Mention | Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Risk Rating System | Special Mention | Commercial business
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Risk Rating System | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	11,453	14,565
Risk Rating System | Substandard | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	574	1,212
Risk Rating System | Substandard | Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans		334
Risk Rating System | Substandard | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,176	2,731
Risk Rating System | Substandard | Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 8,703	10,288
Risk Rating System | Substandard | Commercial business
Financing Receivable, Recorded Investment [Line Items]
Total Loans

XML

LOANS RECEIVABLE - Loans in which formal risk rating system is not utilized, but loans are segregated between performing and non-performing based primarily on delinquency status (Details 5) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 574,085	$ 351,891
One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	365,425	233,531
Leases
Financing Receivable, Recorded Investment [Line Items]
Total Loans	5,491	3,286
Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,442	799
Non Risk Rating System
Financing Receivable, Recorded Investment [Line Items]
Total Loans	376,127	234,723
Non Risk Rating System | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	363,194	230,638
Non Risk Rating System | Leases
Financing Receivable, Recorded Investment [Line Items]
Total Loans	5,491	3,286
Non Risk Rating System | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,442	799
Non Risk Rating System | Performing
Financing Receivable, Recorded Investment [Line Items]
Total Loans	369,749	230,479
Non Risk Rating System | Performing | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	356,816	226,394
Non Risk Rating System | Performing | Leases
Financing Receivable, Recorded Investment [Line Items]
Total Loans	5,491	3,286
Non Risk Rating System | Performing | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,442	799
Non Risk Rating System | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,378	4,244
Non Risk Rating System | Nonperforming | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,378	4,244
Non Risk Rating System | Nonperforming | Leases
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Non Risk Rating System | Nonperforming | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans

XML

LOANS RECEIVABLE - Loan categories of loan portfolio summarized by aging categories of performing loans and nonaccrual loans (Details 6) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 559,529	$ 335,630
90 Days+ Past Due and Accruing
Total Past Due and Accruing	1,389	1,860
Total Loans	574,085	351,891
Non- Accrual	16,419	15,878
30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,389	1,860
90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	13,167	14,401
One-to-four family residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	361,265	228,904
90 Days+ Past Due and Accruing
Total Past Due and Accruing	1,034	1,860
Total Loans	365,425	233,531
Non- Accrual	6,378	4,244
One-to-four family residential | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,034	1,860
One-to-four family residential | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	3,126	2,767
Multi-family residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	13,710	12,478
90 Days+ Past Due and Accruing
Total Past Due and Accruing
Total Loans	13,710	12,478
Non- Accrual
Multi-family residential | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current
Multi-family residential | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	94,247	78,513
90 Days+ Past Due and Accruing
Total Past Due and Accruing	260
Total Loans	95,853	79,859
Non- Accrual	1,346	1,346
Commercial real estate | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	260
Commercial real estate | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,346	1,346
Construction and land development
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	77,469	11,551
90 Days+ Past Due and Accruing
Total Past Due and Accruing
Total Loans	86,164	21,839
Non- Accrual	8,695	10,288
Construction and land development | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current
Construction and land development | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	8,695	10,288
Commercial business
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		99
90 Days+ Past Due and Accruing
Total Past Due and Accruing
Total Loans		99
Non- Accrual
Commercial business | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current
Commercial business | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current
Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	5,402	3,286
90 Days+ Past Due and Accruing
Total Past Due and Accruing	89
Total Loans	5,491	3,286
Non- Accrual
Leases | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	89
Leases | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	7,436	799
90 Days+ Past Due and Accruing
Total Past Due and Accruing	6
Total Loans	7,442	799
Non- Accrual
Consumer | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	6
Consumer | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current

XML

LOANS RECEIVABLE - Activity in allowance (Details 7) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	$ 3,454	$ 2,919	$ 3,269	$ 2,930
Charge-offs	(1,948)		(1,948)	(11)
Recoveries	25	44	25	44
Provision	2,365	75	2,550	75
ALLL balance	3,896	3,038	3,896	3,038
One- to four-family residential
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	1,564	1,471	1,627	1,635
Charge-offs	(113)		(113)	(11)
Recoveries	25		25
Provision	(126)	40	(189)	(113)
ALLL balance	1,350	1,511	1,350	1,511
Multi-family residential
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	135	58	137	66
Charge-offs
Recoveries
Provision	(13)	(15)	(15)	(23)
ALLL balance	122	43	122	43
Commercial real estate
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	963	359	859	231
Charge-offs
Recoveries
Provision	(101)	69	3	197
ALLL balance	862	428	862	428
Construction and land development
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	415	757	316	724
Charge-offs	(1,819)		(1,819)
Recoveries		44		44
Provision	2,439	(28)	2,538	5
ALLL balance	1,035	773	1,035	773
Commercial business
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance			1
Charge-offs
Recoveries
Provision			(1)
ALLL balance
Leases
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	28		21
Charge-offs
Recoveries
Provision			7
ALLL balance	28		28
Consumer
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	35	8	10	5
Charge-offs	(16)		(16)
Recoveries
Provision	116	(1)	141	2
ALLL balance	135	7	135	7
Unallocated
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	314	266	298	269
Charge-offs
Recoveries
Provision	50	10	66	7
ALLL balance	$ 364	$ 276	$ 364	$ 276

XML

LOANS RECEIVABLE (Detail Textuals)	3 Months Ended		6 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Mar. 31, 2017 USD ($) Loan	Mar. 31, 2016 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Provision for loan losses	$ 2,365,000	$ 75,000	$ 2,550,000	$ 75,000
Number of Loans | Loan			10
Pre-modification outstanding recorded investment			$ 6,900,000
Charge-offs	1,948,000		$ 1,948,000	11,000
Nonperforming
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Loan			3
Pre-modification outstanding recorded investment			$ 4,900,000
Number of loans default | Loan			1
Amount of loan concerns sufficiancy of cash flow			$ 1,400,000
Number of remaining loan default | Loan			2
Amount of loan default			$ 3,500,000
Amount charged off in current quarter			614,000
One- to four-family residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Provision for loan losses	(126,000)	40,000	(189,000)	(113,000)
Charge-offs	113,000		113,000	11,000
One- to four-family residential | Nonperforming
Accounts, Notes, Loans and Financing Receivable [Line Items]
Pre-modification outstanding recorded investment			$ 1,400,000
Number of loans default | Loan			1
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Provision for loan losses	(101,000)	69,000	$ 3,000	197,000
Charge-offs
Number of loans default | Loan			1
Amount of loan default			$ 730,000
Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Provision for loan losses	2,439,000	(28,000)	2,538,000	5,000
Charge-offs	$ 1,819,000		$ 1,819,000
Number of loans default | Loan			2
Amount of loan default			$ 2,800,000

XML

DEPOSITS - Major classifications of deposits (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Amount
Money market deposit accounts	$ 87,107	$ 55,552
Interest-bearing checking accounts	54,763	34,984
Non interest-bearing checking accounts	9,272	3,804
Passbook, club and statement savings	107,335	70,924
Certificates maturing in six months or less	125,124	97,418
Certificates maturing in more than six months	211,509	126,519
Total deposits	$ 595,110	$ 389,201
Percent
Money market deposit accounts	14.60%	14.30%
Interest-bearing checking accounts	9.20%	9.30%
Non interest-bearing checking accounts	1.60%	0.70%
Passbook, club and statement savings	18.00%	18.20%
Certificates maturing in six months or less	21.00%	25.00%
Certificates maturing in more than six months	35.60%	32.50%
Total	100.00%	100.00%

XML

DEPOSITS (Detail Textuals) - USD ($) $ in Millions	Mar. 31, 2017	Sep. 30, 2016
Deposits [Abstract]
Certificates of $250,000 and over	$ 27.9	$ 17.0

XML

ADVANCES FROM FEDERAL HOME LOAN BANK (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2016
Advances from Federal Home Loan Banks [Abstract]
Balance at quarter-end	$ 79,057	$ 27,000	$ 27,000
Average balance outstanding		27,000	23,500
Maximum month-end balance		$ 27,000	$ 27,000
Weight-average rate at period end		1.00%	1.00%
Weight-average rate during the period		1.00%	1.00%

XML

ADVANCES FROM FEDERAL HOME LOAN BANK (Details 1) $ in Thousands	6 Months Ended
	Mar. 31, 2017 USD ($)
Federal Home Loan Bank, Advances [Line Items]
Amount	$ 79,057
Coupon	2.15%	[1]
Fixed Rate Advance Maturity Date 17-Nov-17
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Nov. 17, 2017
Amount	$ 10,000
Coupon	1.21%
Call Date	Not Applicable
Fixed Rate -Amortizing Maturity Date 1-Dec-17
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Dec. 01, 2017
Amount	$ 1,511
Coupon	1.16%
Call Date	Not Applicable
Fixed Rate -Advance Maturity Date 4-Dec-17
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Dec. 04, 2017
Amount	$ 2,000
Coupon	1.15%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 19-Mar-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Mar. 19, 2018
Amount	$ 4,939
Coupon	2.53%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 19-Mar-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Mar. 19, 2018
Amount	$ 4,959
Coupon	2.13%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 20-Jun-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Jun. 20, 2018
Amount	$ 2,981
Coupon	1.86%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 25-Jun-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Jun. 25, 2018
Amount	$ 2,973
Coupon	2.09%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 27-Aug-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Aug. 27, 2018
Amount	$ 6,729
Coupon	4.15%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 15-Nov-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Nov. 15, 2018
Amount	$ 2,980
Coupon	1.89%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 16-Nov-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Nov. 16, 2018
Amount	$ 7,500
Coupon	1.40%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 26-Nov-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Nov. 26, 2018
Amount	$ 1,989
Coupon	2.35%
Call Date	Not Applicable
Fixed Rate -Advance Maturity Date 3-Dec-18
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Dec. 03, 2018
Amount	$ 3,000
Coupon	1.54%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 16-Aug-19
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Aug. 16, 2019
Amount	$ 2,929
Coupon	2.66%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 9-Oct-19
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Oct. 09, 2019
Amount	$ 1,958
Coupon	2.54%
Call Date	Not Applicable
Fixed Rate - Amortizing Maturity Date 18-Nov-19
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Nov. 18, 2019
Amount	$ 4,098
Coupon	1.53%
Call Date	Not Applicable
Fixed Rate - Advance Maturity 26-Nov-19
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Nov. 26, 2019
Amount	$ 2,949
Coupon	1.81%
Call Date	Not Applicable
Fixed Rate - Advance Maturity 22-Jun-20
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Jun. 22, 2020
Amount	$ 2,927
Coupon	2.64%
Call Date	Not Applicable
Fixed Rate - Advance Maturity 24-Jun-20
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Jun. 24, 2020
Amount	$ 1,936
Coupon	2.85%
Call Date	Not Applicable
Fixed Rate -Advance Maturity Date 27-Jul-20
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Jul. 27, 2020
Amount	$ 2,049
Coupon	1.38%
Call Date	Not Applicable
Fixed Rate - Advance Maturity 17-Aug-20
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Aug. 17, 2020
Amount	$ 1,921
Coupon	3.06%
Call Date	Not Applicable
Fixed Rate - Advance Maturity 9-Oct-20
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Oct. 09, 2020
Amount	$ 1,929
Coupon	2.92%
Call Date	Not Applicable
Fixed Rate -Advance Maturity Date 27-Jul-21
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Jul. 27, 2021
Amount	$ 249
Coupon	1.52%
Call Date	Not Applicable
Fixed Rate -Advance Maturity Date 28-Jul-21
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Jul. 28, 2021
Amount	$ 249
Coupon	1.48%
Call Date	Not Applicable
Fixed Rate Advance Maturity Date 28-Jul-21
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Jul. 28, 2021
Amount	$ 249
Coupon	1.42%
Call Date	Not Applicable
Fixed Rate -Advance Maturity Date 19-Aug-21
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Aug. 19, 2021
Amount	$ 249
Coupon	1.55%
Call Date	Not Applicable
Fixed Rate - Advance Maturity Date 7-Oct-21
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Oct. 07, 2021
Amount	$ 1,899
Coupon	3.19%
Call Date	Not Applicable
Fixed Rate Advance Maturity Date 12-Oct-21
Federal Home Loan Bank, Advances [Line Items]
Maturity Date	Oct. 12, 2021
Amount	$ 1,905
Coupon	3.23%
Call Date	Not Applicable

[1] Weighted average coupon rate

XML

ADVANCES FROM FEDERAL HOME LOAN BANK (Details Textuals)	3 Months Ended		6 Months Ended
	Mar. 31, 2017 USD ($) Loan	Mar. 31, 2016 USD ($)	Mar. 31, 2016 USD ($)
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Average balance outstanding		$ 27,000,000	$ 23,500,000
Interest rate swap
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Average balance outstanding	$ 20,000
Number of day federal home loan bank advances | Loan	2
FHLB advance associated with an interest rate swap contract	$ 10,000
Weighted average effective cost	117.00%

XML

DERIVATIVES (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Mar. 31, 2017	Sep. 30, 2016
Derivative [Line Items]
Unrealized Gain	$ 582	$ (202)
Interest rate swap
Derivative [Line Items]
Notional Amount	$ 10,000	$ 10,000
Pay Rate	1.15%	1.15%
Receive Rate	1 Month Libor	1 Mth Libor
Maturity Date	Apr. 06, 2021	Apr. 06, 2021
Unrealized Gain	$ 250	$ (92)
Interest rate swap contract
Derivative [Line Items]
Notional Amount	$ 10,000	$ 10,000
Pay Rate	1.18%	1.18%
Receive Rate	1 Month Libor	1 Mth Libor
Maturity Date	Jun. 13, 2021	Jun. 13, 2021
Unrealized Gain	$ 260	$ (103)
Interest rate swap contract
Derivative [Line Items]
Notional Amount	$ 1,100	$ 1,100
Pay Rate	4.10%	4.10%
Receive Rate	1 Month Libor +276 bp	1 Mth Libor +276 bp
Maturity Date	Aug. 01, 2026	Aug. 01, 2026
Unrealized Gain	$ 72	$ (7)

XML

DERIVATIVES (Detail Textuals) $ in Millions	Mar. 31, 2017 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Interest rate swap agreements outstanding amount	$ 21.1

XML

INCOME TAXES - Items that gave rise to significant portions of deferred income taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Deferred tax assets:
Allowance for loan losses	$ 1,593	$ 1,289
Nonaccrual interest	292	163
Accrued vacation	12	13
Capital loss carryforward	378	378
Split dollar life insurance	18	18
Post-retirement benefits	93	96
Unrealized losses on available for sale securities	860
Goodwill	2,042
Unrealized losses on interest rate swaps		69
Employee benefit plans	382	434
Total deferred tax assets	5,670	2,460
Valuation allowance	(378)	(378)
Total deferred tax assets, net of valuation allowance	5,292	2,082
Deferred tax liabilities:
Property	423	423
Unrealized gains on available for sale securities		500
Unrealized gains on interest rate swaps	198
Miscellaneous	12	12
Deferred loan fees	455	578
Total deferred tax liabilities	1,088	1,513
Net deferred tax assets	$ 4,204	$ 569

XML

INCOME TAXES (Detail Textuals) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Valuation allowance	$ 378	$ 378

XML

STOCK COMPENSATION PLANS - Summary of non-vested stock award activity (Details) - $ / shares	1 Months Ended	6 Months Ended
	Aug. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Number of Shares
Nonvested stock awards at October 1, 2016		172,788	241,428
Granted	12,500	17,128
Forfeited			(36,762)
Vested		(43,018)	(49,511)
Nonvested stock awards at the March 31, 2017		146,898	155,155
Weighted Average Grant Date Fair Value
Nonvested stock awards at October 1, 2016		$ 12.03	$ 11.74
Granted		17.43
Forfeited			11.55
Vested		11.61	11.47
Nonvested stock awards at the March 31, 2017		$ 12.78	$ 11.87

XML

STOCK COMPENSATION PLANS - Summary of status of stock options under Stock Option Plan (Details 1) - 2008 Option Plan and 2014 SIP - $ / shares	6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Number of Shares
Outstanding at October 1, 2016	921,909	1,074,430
Granted	22,828
Exercised	(32,224)	(130,535)
Forfeited		(93,939)
Outstanding at March 31, 2017	912,513	849,956
Exercisable at March 31, 2017	579,078	347,037
Weighted Average Exercise Price
Outstanding at October 1, 2016	$ 11.70	$ 11.92
Granted	11.43
Exercised	11.50	11.49
Forfeited		11.55
Outstanding at March 31, 2017	11.85	12.03
Exercisable at March 31, 2017	$ 11.43	$ 11.38

XML

STOCK COMPENSATION PLANS (Detail Textuals) - USD ($)	1 Months Ended		6 Months Ended		12 Months Ended
	Jan. 31, 2014	Dec. 31, 2013	Mar. 31, 2017	Mar. 31, 2016	Sep. 30, 2005	Jan. 01, 2017	Dec. 31, 2016	Sep. 30, 2016
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
ESOP shares allocated to participant's accounts			8,879	17,758
Compensation expense of ESOP			$ 421,000	$ 265,000
Number of treasury share purchased			1,811,010					1,499,265
Amount allocated to purchase treasury stock			$ 26,629,000					$ 21,098,000
Employee Stock Ownership Plan ESOP Plan
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Number of common shares purchased under employee stock ownership plan (ESOP)	30,100	255,564			427,057
Aggregate cost of common stock purchased under employee stock ownership plan (ESOP)	$ 3,100,000				$ 4,500,000
Number of shares held by ESOP			468,156
ESOP shares allocated to participant's accounts			243,734
Additional ESOP shares allocated to participant's accounts							35,517
Compensation expense of ESOP			$ 139,000	$ 265,000
Number of treasury share purchased						303,115
Amount allocated to purchase treasury stock						$ 5,200,000
Number of shares allocated to remaining participants						115,000

XML

STOCK COMPENSATION PLANS (Detail Textuals 1) - USD ($)	1 Months Ended		3 Months Ended		6 Months Ended
	Aug. 31, 2016	Feb. 28, 2015	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares purchased by RRP trust					42,791
Vesting period of awards granted	5 years
Number of shares granted	12,500				17,128
2008 Recognition and Retention Plan ("2008 RRP")
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares purchased by RRP trust					213,528
Value of shares purchased in open market by RRP trust					$ 2,500,000
Average price per share of common stock purchased in the open market			$ 11.49		$ 11.49
Percentage of vesting per year					20.00%
Vesting period of awards granted					5 years
Number of shares granted	7,473
2014 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted	3,027
2014 Stock Incentive Plan | Restricted stock awards or units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of forfeit shares exceptional for award		45,000
Maximum number of shares awarded under the plan		285,655
Number of shares granted		233,500			17,128
2008 RRP and 2014 SIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares purchased by RRP trust		587,112
Recognized compensation expense			$ 145,000	$ 115,000	$ 280,000	$ 243,000
Income tax benefit realized			95,000	$ 39,000	39,000	$ 83,000
Additional compensation expense for shares awarded remained unrecognized			$ 1,300,000		$ 1,300,000

XML

STOCK COMPENSATION PLANS (Detail Textuals 2) - USD ($)	1 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 31, 2016	Feb. 28, 2015	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2010	Sep. 30, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of options	5 years
Number of shares purchased for award					42,791
Number of shares granted	12,500				17,128
Estimated fair value of options granted per share					$ 3.18		$ 2.13	$ 4.58	$ 4.67	$ 3.34	$ 2.92	$ 2.98
Fair value, valuation method					Black-Scholes pricing model		Black-Scholes pricing model	Black-Scholes pricing model
Exercise price and fair value			$ 17.43		$ 17.43		$ 14.42	$ 12.23
Expected term					7 years		7 years	7 years
Volatility rate					14.40%		13.82%	38.16%
Expected interest rate					2.22%		1.36%	1.62%
Expected yield					0.69%		0.80%	0.98%
Unrecognized compensation expense for options			$ 1,400,000		$ 1,400,000
Weighted average period for expense recognize					3 years 1 month 6 days
2008 Stock Option Plan (the "2008 Option Plan") | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of vesting and exercisable per year					20.00%
Vesting period of options					5 years
Exercisable period of options after grant date					10 years
Number of common stock available for issuance			533,808		533,808
Number of vested options					467,758
Number of shares purchased for award		608,737
Number of shares granted	18,866
2014 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted	3,027
2014 Stock Incentive Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares for issuance pursuant to options			714,145		714,145
Number of shares purchased for award		605,000
Number of shares granted	8,634	608,737			22,828
Weighted average remaining contractual term for options outstanding					4 years 8 months 12 days
2008 RRP and 2014 SIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares purchased for award		587,112
Recognized compensation expense			$ 145,000	$ 115,000	$ 280,000	$ 243,000
2008 Option Plan and 2014 SIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted	18,867
Recognized compensation expense			138,000	112,000	268,000	248,000
Tax benefit from stock-based compensation			$ 16,000	$ 13,000	$ 32,000	$ 29,000

XML

COMMITMENTS AND CONTINGENT LIABILITIES (Detail Textuals) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Mar. 31, 2017	Sep. 30, 2016
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Exposure related to loans sold to FHLB	$ 1,900
Aggregate undisbursed portion of loans-in-process	45,173	$ 5,371
Loan Origination Commitments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Exposure related to loans sold to FHLB	13,900	9,900
Aggregate undisbursed portion of loans-in-process	$ 45,200	$ 5,400
Loan Origination Commitments | Minimum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Market interest rate on fixed and variable rate loans	4.00%	3.75%
Loan Origination Commitments | Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Market interest rate on fixed and variable rate loans	5.50%	5.00%
Unused lines of Credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Exposure related to loans sold to FHLB	$ 7,200	$ 3,300
Letters of Credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Exposure related to loans sold to FHLB	$ 1,500	$ 1,900

XML

FAIR VALUE MEASUREMENT - Assets measured at fair value on recurring basis (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016
Assets:
Assets, total	$ 190,690		$ 138,694
Level 1
Assets:
Assets, total	66		42
Level 2
Assets:
Assets, total	190,042		138,652
Level 3
Assets:
Assets, total
U.S. Government and agency obligations
Assets:
Assets, total	20,495		21,024
Mortgage-backed securities - U.S. Government agencies
Assets:
Assets, total	132,792		91,575
Corporate bonds
Assets:
Assets, total	36,755		26,053
FHLMC preferred stock
Assets:
Assets, total	66		42
Fair Value, Measurements, Recurring
Assets:
Assets, total	190,108		138,694
Liabilities
Liabilities, total			202
Fair Value, Measurements, Recurring | Level 1
Assets:
Assets, total	66		42
Liabilities
Liabilities, total
Fair Value, Measurements, Recurring | Level 2
Assets:
Assets, total	190,042		138,652
Liabilities
Liabilities, total			202
Fair Value, Measurements, Recurring | Level 3
Assets:
Assets, total
Liabilities
Liabilities, total
Fair Value, Measurements, Recurring | U.S. Government and agency obligations
Assets:
Assets, total	20,945		21,024
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 1
Assets:
Assets, total
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 2
Assets:
Assets, total	20,945		21,024
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 3
Assets:
Assets, total
Fair Value, Measurements, Recurring | Mortgage-backed securities - U.S. Government agencies
Assets:
Assets, total	132,792		91,575
Fair Value, Measurements, Recurring | Mortgage-backed securities - U.S. Government agencies | Level 1
Assets:
Assets, total
Fair Value, Measurements, Recurring | Mortgage-backed securities - U.S. Government agencies | Level 2
Assets:
Assets, total	132,792		91,575
Fair Value, Measurements, Recurring | Mortgage-backed securities - U.S. Government agencies | Level 3
Assets:
Assets, total
Fair Value, Measurements, Recurring | Corporate bonds
Assets:
Assets, total	36,755		26,053
Fair Value, Measurements, Recurring | Corporate bonds | Level 1
Assets:
Assets, total
Fair Value, Measurements, Recurring | Corporate bonds | Level 2
Assets:
Assets, total	36,755		26,053
Fair Value, Measurements, Recurring | Corporate bonds | Level 3
Assets:
Assets, total
Fair Value, Measurements, Recurring | FHLMC preferred stock
Assets:
Assets, total	66		42
Fair Value, Measurements, Recurring | FHLMC preferred stock | Level 1
Assets:
Assets, total	66		42
Fair Value, Measurements, Recurring | FHLMC preferred stock | Level 2
Assets:
Assets, total
Fair Value, Measurements, Recurring | FHLMC preferred stock | Level 3
Assets:
Assets, total
Fair Value, Measurements, Recurring | Interest rate swap contracts
Assets:
Assets, total	582
Liabilities
Liabilities, total			202
Fair Value, Measurements, Recurring | Interest rate swap contracts | Level 1
Assets:
Assets, total
Liabilities
Liabilities, total
Fair Value, Measurements, Recurring | Interest rate swap contracts | Level 2
Assets:
Assets, total	582
Liabilities
Liabilities, total		$ 202
Fair Value, Measurements, Recurring | Interest rate swap contracts | Level 3
Assets:
Assets, total
Liabilities
Liabilities, total

XML

FAIR VALUE MEASUREMENT - Changes in level 3 assets measured at fair value (Details 1) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 16,945	$ 19,429
Real estate owned	192	581
Total	17,137	20,010
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Real estate owned
Total
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Real estate owned
Total
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	16,945	19,429
Real estate owned	192	581
Total	$ 17,137	$ 20,010

XML

FAIR VALUE MEASUREMENT - Valuation processes used to determine nonrecurring fair value measurements categorized within level 3 (Details 2) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
		Mar. 31, 2017	Sep. 30, 2016
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		$ 17,137	$ 20,010
Level 3
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		17,137	20,010
Level 3 | Impaired loan | Property Appraisals Valuation Technique
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		$ 16,945	$ 19,429
Valuation Technique	[1],[2]	Property appraisals	Property appraisals
Unobservable Input	[3]	Management discount for selling costs, property type and market volatility	Management discount for selling costs, property type and market volatility
Level 3 | Impaired loan | Property Appraisals Valuation Technique | Minimum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Management discount rate		6.00%	6.00%
Level 3 | Impaired loan | Property Appraisals Valuation Technique | Maximum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Management discount rate		46.00%	46.00%
Level 3 | Impaired loan | Property Appraisals Valuation Technique | Weighted Average
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Management discount rate		10.00%	10.00%
Level 3 | Real estate owned | Property Appraisals Valuation Technique
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		$ 192	$ 581
Valuation Technique	[1],[2]	Property appraisals	Property appraisals
Unobservable Input	[3]	Management discount for selling costs, property type and market volatility	Management discount for selling costs, property type and market volatility
Level 3 | Real estate owned | Property Appraisals Valuation Technique | Weighted Average
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Management discount rate		10.00%	10.00%

[1] Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various Level 3 inputs, which are not identifiable.

[2] Includes qualitative adjustments by management and estimated liquidation expenses.

[3] Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

XML

FAIR VALUE MEASUREMENT - Assets measured at fair value on a non-recurring basis and the adjustments to the carrying value (Details 3) - USD ($) $ in Thousands	Mar. 31, 2017	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015
Assets:
Cash and cash equivalents	$ 13,058	$ 12,440	$ 7,330	$ 11,272
Certificates of deposit	1,853	1,853
Investment and mortgage-backed securities available for sale	190,108	138,694
Investment and mortgage-backed securities held to maturity	58,197	39,971
Loans receivable, net	521,885	344,948
Accrued interest receivable	2,626	1,928
Other real estate owned	192	581
Federal Home Loan Bank stock	5,699	2,463
Bank owned life insurance	27,709	13,055
Interest rate swap contracts	582
Liabilities:
Checking accounts	64,035	38,788
Money market deposit accounts	87,107	55,552
Passbook, club and statement savings accounts	107,335	70,924
Certificates of deposit	336,633	223,937
Advances from FHLB short-term	27,000	20,000
Advances from FHLB long-term	79,057	30,638	$ 27,000
Accrued interest payable	790	1,403
Advances from borrowers for taxes and insurance	2,789	1,748
Interest rate swap contracts		202
Fair Value
Assets:
Cash and cash equivalents	13,058	12,440
Certificates of deposit	1,853	1,853
Investment and mortgage-backed securities available for sale	190,108	138,694
Investment and mortgage-backed securities held to maturity	56,540	40,700
Loans receivable, net	524,148	344,100
Accrued interest receivable	2,626	1,928
Other real estate owned	192
Federal Home Loan Bank stock	5,699	2,463
Bank owned life insurance	27,709	13,055
Interest rate swap contracts	582
Liabilities:
Checking accounts	64,035	38,788
Money market deposit accounts	87,107	55,552
Passbook, club and statement savings accounts	107,335	70,924
Certificates of deposit	338,846	225,383
Advances from FHLB short-term	27,000	20,000
Advances from FHLB long-term	78,271	30,222
Accrued interest payable	790	1,403
Advances from borrowers for taxes and insurance	2,789	1,748
Interest rate swap contracts		202
Level 1
Assets:
Cash and cash equivalents	13,058	12,440
Certificates of deposit	1,853	1,853
Investment and mortgage-backed securities available for sale	66	42
Investment and mortgage-backed securities held to maturity
Loans receivable, net
Accrued interest receivable	2,626	1,928
Other real estate owned	192
Federal Home Loan Bank stock	5,699	2,463
Bank owned life insurance	27,709	13,055
Interest rate swap contracts
Liabilities:
Checking accounts	64,035	38,788
Money market deposit accounts	87,107	55,552
Passbook, club and statement savings accounts	107,335	70,924
Certificates of deposit
Advances from FHLB short-term	27,000	20,000
Advances from FHLB long-term
Accrued interest payable	790	1,403
Advances from borrowers for taxes and insurance	2,789	1,748
Interest rate swap contracts
Level 2
Assets:
Cash and cash equivalents
Certificates of deposit
Investment and mortgage-backed securities available for sale	190,042	138,652
Investment and mortgage-backed securities held to maturity	56,540	40,700
Loans receivable, net
Accrued interest receivable
Other real estate owned
Federal Home Loan Bank stock
Bank owned life insurance
Interest rate swap contracts	582
Liabilities:
Checking accounts
Money market deposit accounts
Passbook, club and statement savings accounts
Certificates of deposit
Advances from FHLB short-term
Advances from FHLB long-term
Accrued interest payable
Advances from borrowers for taxes and insurance
Interest rate swap contracts		202
Level 3
Assets:
Cash and cash equivalents
Certificates of deposit
Investment and mortgage-backed securities available for sale
Investment and mortgage-backed securities held to maturity
Loans receivable, net	524,148	344,100
Accrued interest receivable
Other real estate owned
Federal Home Loan Bank stock
Bank owned life insurance
Interest rate swap contracts
Liabilities:
Checking accounts
Money market deposit accounts
Passbook, club and statement savings accounts
Certificates of deposit	338,846	225,383
Advances from FHLB short-term
Advances from FHLB long-term	78,271	30,222
Accrued interest payable
Advances from borrowers for taxes and insurance
Interest rate swap contracts

XML

FAIR VALUE MEASUREMENT (Detail Textuals) $ in Millions	Mar. 31, 2017 USD ($)
Level 2
Financing Receivable, Impaired [Line Items]
Collateral dependent impaired loans, fair value	$ 16.9

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2017	Mar. 31, 2017
Finite-lived Intangible Assets [Roll Forward]
Balance, Goodwill
Additions/Adjustments	7,163
Balance, Goodwill	7,163	$ 7,163
Balance, Total
Additions/Adjustments	7,985
Amortization	37	37
Balance, Total	7,948	7,948
Core Deposits [Member]
Finite-lived Intangible Assets [Roll Forward]
Balance
Additions/Adjustments	822
Amortization	(37)
Balance	$ 785	$ 785
Amortization Period	10 years

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Details 1) $ in Thousands	Mar. 31, 2017 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2017	$ 75
2018	142
2019	127
2020	112
Thereafter	$ 366

XML

BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Consideration paid:
Common stock issued (1,274,197 shares) at a fair value per share of $17.12 per share.	$ 21,827
Liabilities assumed:
Goodwill resulting from the acquisition	7,163
Polonia Bancorp
Consideration paid:
Common stock issued (1,274,197 shares) at a fair value per share of $17.12 per share.	21,814
Cash for common stock exchanged	18,944
Cash in lieu of fractional shares	1
Total Consideration	40,759
Assets acquired:
Cash and due from banks	47,901
Investments available for sale	42,164
Loans	160,157
Premises and equipment	6,902
Deferred taxes	3,921
Bank-owned life insurance	4,316
Core deposit intangible	822
Other assets	5,802
Total assets	271,985
Liabilities assumed:
Deposits	172,243
FHLB advances short-term	7,000
FHLB advances long -term	50,232
Other liabilities	8,914
Total liabilities	238,389
Net assets acquired	33,596
Goodwill resulting from the acquisition	$ 7,163

XML

BUSINESS COMBINATIONS (Parentheticals) (Details) - Polonia Bancorp	6 Months Ended
	Mar. 31, 2017 $ / shares shares
Business Acquisition [Line Items]
Number of shares issued in business combination (in shares) | shares	1,274,197
Shares price in business combination | $ / shares	$ 17.12

XML

BUSINESS COMBINATIONS (Details 1) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Polonia Common Stock:
Purchase consideration assigned to Polonia shares exchanged for Prudential Common Stock	$ 21,827
Estimated adjustments to reflect liabilities assumed at fair value:
Goodwill resulting from merger	$ 7,163
Polonia Bancorp
Polonia Common Stock:
Total Shares of Common Stock Outstanding	3,416,311
Common Stock Issued Cap	1,708,155
Shares Redeemed for Cash Cap	1,708,156
Prudential Common Stock Issued (conversion rate 0.7460)	1,274,197
Prudential Closing Price at December 31, 2016	$ 17.12
Business Acquisition Per Share Cash Consideration	$ 11.09
Purchase consideration assigned to Polonia shares exchanged for Prudential Common Stock	$ 21,814
Cash Paid to Polonia for Polonia shares	18,943
Cash Paid for fractional shares	1
Net Assets Acquired
Polonia stockholders' equity	35,412
Core deposit intangible assets	822
Estimated adjustments to reflect assets acquired at fair value:
Investment securities	(781)
Portfolio loans	(4,643)
Allowance for loan and lease losses	1,002
Premises	3,049
Other Assets	(74)
Deferred Taxes	934
Total fair value adjustment to assets acquired	309
Estimated adjustments to reflect liabilities assumed at fair value:
Time deposits	894
Borrowings	1,232
Total fair value adjustment to liabilities assumed	2,126
Total net assets acquired	33,595
Goodwill resulting from merger	$ 7,163

XML

BUSINESS COMBINATIONS (Details 2) - Polonia Bancorp - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Business Acquisition [Line Items]
Net interest income		$ 5,299	$ 5,534	$ 8,947	$ 10,387
Provision for loan and leases losses		2,365	75	2,550	75
Net interest income after provision for loan and lease losses		2,934	5,459	6,397	10,312
Non-interest income		518	530	876	941
Non-interest expenses		6,763	5,137	9,483	10,403
(Loss) income before income taxes		(3,311)	852	(2,210)	850
Income tax (benefit) expense		(1,171)	312	(801)	(29)
Net (loss) income		$ (2,140)	$ 540	$ (1,409)	$ 879
Per share data
Weighed average basic shares outstanding		8,639,908	8,655,077	9,253,738	8,655,077
Dilutive shares			270,973		246,791
Adjusted weighted-average dilutive shares	[1]	8,639,908	8,926,050	9,253,738	8,901,868
Basic (loss) earnings per common share		$ 0.28	$ 0.06	$ (0.28)	$ 0.10
Earnings per common share, diluted		$ 0.28	$ 0.06	$ (0.28)	$ 0.10

[1] Weighted-average basis shares outstanding for both periods reflected are the Company's weighted-average shares plus the 1,274,197, shares that were issued as consideration for the Merger. The dilutive shares reflect the Company's estimated diluted shares for the period.

XML

BUSINESS COMBINATIONS (Parentheticals) (Details 2)	6 Months Ended
	Mar. 31, 2017 shares
Polonia Bancorp
Business Acquisition [Line Items]
Number of shares issued in business combination	1,274,197

XML

BUSINESS COMBINATIONS (Details Textuals) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2017	Mar. 31, 2017 USD ($) $ / shares shares
Core Deposits [Member]
Business Acquisition [Line Items]
Amortization Period	10 years
Polonia Bancorp
Business Acquisition [Line Items]
Business Acquisitions Exchange Ratio	0.7460	0.7460
Business Acquisition Per Share Cash Consideration | $ / shares		$ 11.09
Percentage stock consideration in business acquisition		50.00%
Percentage cash consideration in business acquisition		50.00%
Cash consideration for merger | $		$ 18,944
Number of shares issued in business combination | shares		1,274,197